eBay Ordered to Pay MercExchange $30 Mln

By Geoff Duncan December 13, 2007

eBay Ordered to Pay MercExchange $30 Mln

It’s one of the longest-running patent disputes in the e-commerce world: back in 2001, the founder of MercExchange Tom Woolston filed a patent infringement suit against online auction site eBay, alleging the company’s Buy It Now feature infringed on two patents held by MercExchange. Woolston actually won a decision from a U.S. District Court in 2003, but eBay continued to appeal a principal in the case all the way to the Supreme Court of the United States, which in 2006 actually took eBay’s side and found that infringing on a patent does not necessarily warrant a permanent injunction against the infringer using the technology. The case set and important precedent for injunction boundaries in patent and intellectual property disputes, and has widely been characterized as one of the more important intellectual property cases to reach the Supreme Court in recent years.

But, Supreme Court or no, the case still had to be resolved back at trial court. Although in light of the Supreme Court decision, Judge Jerome Friedman dismissed the idea of giving MercExchange a permanent injunction against eBay earlier this year, the court has nonetheless ruled that eBay must pay MercExchange some $30 million in damages.

eBay, of course, plans to appeal. “In its ruling, the court concluded that it did not have the legal right to consider the merits of our arguments concerning the ‘265 patent, but rather was required to reject our motions based on the procedural posture of the case. We intend to appeal the Court’s ruling on the procedural issues and remain confident that after the appeal, the Court will consider our arguments on their merits,” the company said in a statement.

In the mid 1990s, MercExchange operates for a time as an online auction site; like most other online auction efforts, it eventually succumbed to eBay’s overwhelming presence in the market, and has been generating income from its patent portfolio.

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Geoff Duncan writes, programs, edits, plays music, and delights in making software misbehave. He's probably the only member…

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