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EBay in High Court Over Patent Dispute

UPDATED: The United States Supreme Court agreed Monday to hear eBay's appeal of the long-running and bitter patent dispute between the online auction giant and MercExchange, a vendor of custom software for online auctions, messaging and streamcasting.

EBay is seeking to reverse a U.S. Appeals Court decision earlier this year granting a permanent injunction against the auctioneer's use of the processes patented by MercExchange.

The Virginia-based MercExchange contends that court precedent demands a permanent injunction once infringement of a valid patent has been determined. EBay argues the U.S. Appeals Court eliminated judicial discretion.

Ebay also believes the court gave companies that buy patents a powerful incentive to make infringement claims.

"MercExchange remains confident in its view that it will ultimately prevail in its struggle against this infringer," Scott Robertson, MercExchange's lead attorney in the case, said in a statement. "Since eBay's argument requires overruling long-established legal precedent, we look forward to the consideration of the Supreme Court in this matter."

"Today's ruling does nothing that affects the validity or infringement of the patents in the suit," Robertson added. "By admitting to the infringement in their Supreme Court petition, eBay abandoned any pretense of innocence. The bottom line is whether we will be able to obtain a permanent injunction on eBay's buy-it now operations or whether the court will force a compulsory license."

MercExchange first sued eBay in 2001, claiming the company violated three of its patents involving eBay's "Buy It Now" feature, which lets users pay through PayPal with a credit card or with other PayPal funds.

Ruling that eBay "willfully and directly" infringed on all counts of two of MercExchange's patents, a U.S. District Court in 2003 ordered eBay to pay $35 million in damages to MercExchange. The court refused to grant the permanent injunction sought by MercExchange.

Earlier this year, a U.S. Appeals Court invalidated one of the patent claims, cutting the damages to $25 million but issued a permanent injunction barring eBay's use of MercExchange's patented technology.