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.

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