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Patent Holder Sues eBay and Alibaba Subsidiaries

A patent granted in 2007 for an eBay-selling tool is now at the center of two lawsuits filed on September 5, 2014, against eBay and two subsidiaries of Alibaba – Auctiva and Vendio.

The United States Patent and Trademark Office granted patent number No. 7,296,033 (known as ‘033) to AuctionHelper, which launched eBay and online-auction management tools in 1997. The patent covered the AuctionLynxx tool, including the cross-selling methodology it innovated. At the time, AuctionHelper co-founder Jerry Lynch told EcommerceBytes his company intended to vigorously protect its intellectual property rights.

The plaintiff in this month’s lawsuit, Auction Acceleration Corporation (AAC), is a wholly owned subsidiary of ITUS Corporation and claims to own both the ‘033 patent, entitled “Method for Promoting Selling of Seller Items on an Online Auction Site,” and another, the ‘692 patent, entitled “Method for Presenting Related Items for Auction.” ITUS explained in a press release, “The AAC patents cover presentation and cross selling technologies enabling auction sellers to cross-sell and upsell additional items to interested buyers, resulting in incremental sales, and higher yields per transaction.”

One of AAC’s lawsuits alleges that eBay infringes the ‘033 patent with respect to Auctiva’s Scrolling Gallery tool. It claims that: “In 2001, Gerard Lynch, the named inventor on the ‘033 patent, met with eBay, provided a presentation regarding the technology he had developed, and informed eBay of his pending patent application, which ultimately issued as the ‘033 patent.”

AAC also filed a second lawsuit against eBay and Vendio for infringement of the ‘033 and ‘692 patents with regard to Vendio’s Gallery tool.

ITUS CEO Robert Berman said in the press release announcing the patent infringement lawsuits, “The inventor of this technology was a pioneer in the early days of eBay, building tools that enabled sellers to generate millions of dollars of sales revenue. We will continue to stand up for small inventors and assist them in receiving fair consideration for their inventions, as we build value for our shareholders.”

Berman addressed accusations that he was what’s known as a “patent troll” in this CNN Money article last year. His firm CopyTele, which changed its name to ITUS on September 2nd, buys up patents from mostly small inventors and uses them to sue businesses that it believes are infringing on those patents, according to the article.

“Berman insists that his business actually works for the greater good. Without a company like CopyTele, he says, small inventors would have no ability to defend their intellectual property against big companies looking to copy or steal their inventions. Berman sees his company as protecting the little Davids against Goliaths.”

The article also reveals that ITUS gives inventors a share of the proceeds from the successful lawsuits it brings against companies found to have violated their patents.

Note: EcommerceBytes reviewed the AuctionLynxx tool in 2001 and interviewed Jerry Lynch in this 2004 article.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.