A federal appeals court has upheld patent infringement damages against eBay tied to its “Buy It Now” function, but it also reversed a lower court rejection of plaintiff MercExchange’s move for a permanent injunction.
MercExchange—whose founder now works at eBay rival UBid, and which claims it licensed the patents in question to UBid—had accused eBay of infringing electronic commerce patents key to the “Buy It Now” fixed-price sale feature that has become a popular eBay feature in the past few years, a feature said to account for 31 percent of the total value of goods sold on eBay in the final three months of 2004.
The U.S. Court of Appeals for the Federal Circuit ruled March 16 that one MercPatent was invalid but another was upheld and a third that the lower court rejected was also resurrected by the appellate ruling. A U.S. District Court judge had ordered eBay to pay MercExchange $29.5 million for infringement in May 2003.
The appellate ruling moved some analysts to say both sides won a partial victory. MercExchange’s attorneys said the ruling validated $25 million worth of the original damage award, estimating the newly rejected patent equaled about $4.5 million. The company said they would go back to the lower court and ask for the permanent injunction and an additional two years’ worth of damages.
But eBay said they expected no business fallout from the appellate ruling. "We believe,” the Internet auction kings said in a statement, “that any injunction that might be issued by the district court with respect to the other patent will not have an impact on our business because of changes we have made following the District Court's original verdict.”
The U.S. Patent and Trademark Office, eBay added, is re-examining the validity of the MercExchange patent group, at eBay’s request. “This means,” said patent attorney Dennis Crouch, “that a substantial question was raised as to whether the patents should have been issued in the first place.
"This case may involve a race against time,” Crouch continued. “If the litigation is concluded before the re-examination is complete, then the result of the re-examination may be moot as far as eBay is concerned."
MercExchange founder Thomas Woolston told reporters he is now working at UBid. Woolston claimed to have invented and patented the process for integrating automated payment systems and selling fixed-price items as part of it. In May 2003 a jury held eBay infringed the patents, and three months later a federal judge ordered the $29.5 million damage award—$5.5 million less than the jury called for—while not prohibiting eBay from continuing to sell fixed-price products.
