EBay settles patent dispute with MercExchange

by Nancy Weil

February 28, 2008 —

EBay has settled a patent
dispute with MercExchange
that in 2006 was heard by the U.S. Supreme Court, which sided with the online
auction house in what is considered to be an important ruling on intellectual
property.

Under terms of the deal, eBay will purchase from MercExchange three patents
that were part of a September 2001 lawsuit MercExchange filed, along with additional
technology and inventions related to the dispute. EBay will also license a search-related
patent portfolio that wasn't part of the lawsuit, the company said Thursday.

Other terms of the agreement are not being disclosed, eBay said. The company
does not expect that settlement terms will affect its 2007 financial results
or its 2008 financial guidance.

The dispute included eBay's "buy it now" Web site feature, which
MercExchange contended infringed one of its patents. A jury found in May 2003
that eBay had infringed a patent held by MercExchange, which then asked the
U.S. District Court for the Eastern District of Virginia to issue an injunction
against eBay's use of the feature. The U.S. Court of Appeals for the Federal
Circuit followed long-standing practice of granting injunctions in intellectual-property
cases -- action that is nearly automatic in such lawsuits -- and that paved
the way for the Supreme Court to weigh in.

The Supreme Court unanimously rejected the appellate court position, but it
also said that the District Court had used flawed judgment in its decision.

The Supreme Court decision ended the long-standing practice of near-automatic
injunctions in such cases, clarifying that lower courts must use a four-factor
test when considering patent injunctions.

IDG News Service