Appeals Court Rules In eBay Patent Dispute

by Glen Shapiro, LawAndTax-News.com, New York

18 March 2005

Ruling on Wednesday, an US appeals court handed both sides a partial victory in a dispute between online auction site, eBay and technology firm, MercExchange over the latter's auction-related patents.

In the summer of 2003, a Virginia District Court ruled that with its 'Buy It Now' function, eBay had infringed upon a patent for direct online buying held by MarcExchange founder and former CIA engineer, Tom Woolston.

Federal Judge Jermone Friedman also stated that that auction portal had violated a patent held by Mr Woolston for searching the internet for merchandise from other vendors, but dismissed a violation claim regarding the entire online auction process, arguing that MercExchange had not made an effective case.

This week, the appeals court upheld the earlier ruling on the direct buy patent, and recommended an injunction to prevent eBay from using it, meaning that the firm will either have to remove the 'Buy It Now' function, create a substantially different version, or license the technology from MercExchange.

In a partial victory for eBay, the court denied the validity of the search patent.

However, the biggest surprise, according to observers, was the decision to reinstate MercExchange's patent on the entire auction process, which will open the way to a jury trial on the matter, and could create serious problems for eBay.

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