TELECOM Digest OnLine - Sorted: eBay in Patent Fight Over 'Buy it Now' Feature

eBay in Patent Fight Over 'Buy it Now' Feature

Sonja Barisic, AP (
Wed, 13 Jun 2007 12:12:56 -0500

By SONJA BARISIC, Associated Press Writer

A small Virginia company in a patent fight with eBay Inc. asked a
federal judge Tuesday to stop the online auction powerhouse from using
its "Buy It Now" feature allowing shoppers to buy items at a fixed

A federal jury found in 2003 that eBay had infringed Great Falls-based
MercExchange LLC's patent. But last year, the U.S. Supreme Court
handed a victory to patent-reform advocates when it ruled that
MercExchange was not automatically entitled to a court order blocking
the offending service.

Now, U.S. District Court Judge Jerome B. Friedman must decide whether
MercExchange is entitled to a permanent injunction. The judge did not
say when he would rule.

Friedman also did not immediately rule on eBay's request to stay the
proceedings until the federal patent office has completed a
re-examination of the patent -- a process that MercExchange's
lawyers said could take 10 years.

Lawyers for San Jose-based eBay told the judge that the company has
designed a workaround so that it no longer infringes on the patent and
thus an injunction is unnecessary.

Attorney Jeff Randall also said MercExchange has not suffered
irreparable harm and that the company is better off now than it was
before the trial, citing an investment by a hedge fund.

MercExchange's attorneys, however, argued that the potential for
future infringement is at stake and that MercExchange will not be able
to sell exclusive licenses for use of its patent without an

"Without an injunction in the face of an infringing monopolist that
now has 95 percent of the market, MercExchange cannot make productive
use of its patent in any way," lawyer Seth Waxman said.

Randall said an injunction would give MercExchange "illegitimate
leverage," hurting eBay's reputation in the marketplace by making
people think eBay is still infringing the patent.

"That's what they want," Randall said of MercExchange.

Randall also said MercExchange is not interested in building its

"They sit back and try to collect from businesses for their patents,
and that is it," he said.

In arguing for a stay, Randall said waiting for the outcome of the
patent re-examination would save a lot of litigation in the meantime.

"I get the impression that, in a nice legal way, the court is being
threatened," the judge said.

MercExchange attorney Greg Stillman said it was wrong to wait for
patent authorities to sort everything out and that eBay could have
avoided a lot of litigation by asking for the re-examination much

The patent battle focuses on eBay's button for buying products at a
fixed price, bypassing the bidding process, and MercExchange's claim
that the technology infringes on its intellectual property.

The federal jury that sided with MercExchange awarded the company $35
million. The amount later was reduced to $25 million. Stillman said
outside court that MercExchange intends to ask the judge to increase
the damages to take into account infringement since the 2003 trial.

The Supreme Court's ruling does not affect the judgment against eBay.

In the closely watched case, the high court ruled that judges have
flexibility in deciding whether to issue court orders barring
continued use of a technology after juries find a patent
violation. The decision threw out a ruling by a federal appeals court
that said injunctions should be automatic unless exceptional
circumstances apply.

The case became a rallying point for critics who argue the U.S. patent
system is riddled with abuse from small businesses that sue
established companies to enforce patents for ideas that have never
been developed into products.

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Copyright © 2007 The Associated Press.

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