EcommerceBytes-NewsFlash, Number 1588 - July 30, 2007     2 of 3

eBay Patent Wars: MercExchange Likely to Appeal Injunction Ruling

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In a ruling on Friday, a judge allowed eBay to continue using its Buy It Now feature, which a jury had found infringed on MercExchange's '265 (fixed price) patent 4 years ago. A MercExchange lawyer said the company will probably appeal the injunction ruling. The judge also granted eBay's motion to stay proceedings on MercExchange's '051 (auction) patent until the PTO (Patent and Trademark Office) completed its reexamination of the patent. MercExchange had said it planned to sue eBay over its '051 patent separately after an appeals court ruling cleared the way.

On July 27, 2007, Judge Jerome B. Friedman ruled on motions filed by the two parties in the long-running patent dispute, giving each side some wins and some losses. While there is no injunction against eBay from using the Buy It Now feature, the judge must now preside over motions that will include arguments from MercExchange that eBay must pay royalties under a compulsory license, though eBay has said it has already designed a work-around so the feature no longer infringes upon the '265 patent.

In addition, MercExchange's lawyer Greg Stillman of Hunton Williams said it would probably file a motion for an appeal of the denial of the injunction of the '265 patent in a process that he said could take between 9 and 12 months. "Remember, the Federal Circuit where we have to appeal to has already ruled that we are entitled to an injunction."

In response, eBay spokesperson Catherine England said on Monday, "Given the Supreme Court's decision this summer and the standards they set forth on whether or not an injunction should be issued, we feel that the District Court in this case has applied that standard and took his time to provide a very well reasoned decision, so we're extremely pleased with the District Court decision at this time."

eBay had released a statement on Friday that read, "eBay Inc. is extremely pleased with today's decision by the U.S. District Court of Eastern Virginia, to deny, for the second time, MercExchange's request for an injunction. We are equally pleased by the Court's decision to stop all proceedings regarding Patent 051 pending a final decision by the Patent Office regarding its validity. As for the remaining patent, the pertinent issues will be resolved by the court. We are also optimistic that the Patent Office will soon issue final decisions revoking both patents."

Friday's court order makes a fascinating read that includes confidential correspondence between MercExchange's founder and eBay competitor uBid CEO Bob Tomlinson, along with references to alleged hanky-panky involving the PTO rexam from both sides. The judge noted yet again the contentious nature of the litigation, "as each party looks for any opportunity whatsoever to gain an advantage on the other."

The court order and opinion can be read through a link on Dennis Crouch's blog in a PDF file:

About the author:

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). Follow her on Twitter at @ecommercebytes and send news tips to

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