eBay loses latest battle in patent dispute

By Steve Malone

Posted on 18 Mar 2005 at 09:36

eBay has lost the latest round in its long running battle with shopping site MercExchange over the use of the `Buy it now` feature used on the auction site. A US appeals court has upheld a $25 million damages award against eBay awarded by a court in 2003. A jury found that eBay had infringed MercExchange's e-commerce patent.

The appeals court also lifted the ban on granting MercExchange a permanent injunction preventing eBay from continuing to infringe the patent. Not surprisingly, MercExchanges says it will now press for the permanent injunction
In a mixed result for both parties, the U.S. 4th Circuit Court of Appeals ruled that one disputed MercExchange patent was confirmed, another was invalid and a third patent, previously judged invalid by the lower court, was reaffirmed.

The lower court had awarded MercExchange a total of $29.5 million in damages. The invalidated patent means that $4.5 millions worth of damages has been withdrawn. During the course of the appeal eBay has been allowed to withhold payment to MercExchange. However, the company now says that it will press for another two years worth of additional damages.

According to eBay, sales via the `Buy it now` feature accounted for about 31 percent of the total value of goods sold on eBay. This feature is generally used to sell items at a fixed price on the service rather than wait for an auction to be completed. It is often used by the smaller merchants who use eBay as a shop window for their goods on the internet.

EBay isn`t giving up the fight yet though. The company has asked the US Patent and Trademark Office (PTO) to rexamine the patent stating that the PTO had found 'that substantial questions exist regarding the validity of MercExchange's claims. The Patent and Trademark office has already initially rejected all of the claims of one of MercExchange's patents'.