E-Bay Ordered To Pay Out $35 Million In Patent Dispute

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

29 May 2003

A federal jury ruled on Tuesday that online auction website, eBay 'wilfully' infringed on patents held by MercExchange founder, Tom Woolston, and ordered the internet giant to pay out $35 million.

Ruling in the US District Court for the Eastern District of Virginia, jurors decided that eBay's 'Buy It Now' service, and Half.com business infringed on patents held by Woolston. A further claim, that the MercExchange chief had patented the core auction system utilised by eBay was thrown out before the case went to trial.

Woolston was reportedly contacted by eBay, which expressed an interest in purchasing his patents, in 2000. However, following a breakdown of communication between the auction site and MercExchange, the smaller company was obliged to take legal action.

Observers suggested when the case went to trial last month that the exchange of e-mails between the two organisations was likely to prove significant, as it proved that eBay knew of MercExchange's ownership of the patents, but continued to infringe them.

US District Judge, Jerome B. Friedman is expected to rule within the next month on whether eBay will be obliged to alter its business practices as a result of the verdict, or whether it will have to license the technology from MercExchange. The auction firm has argued that the ruling is not supported by evidence, and announced that it will be asking Judge Friedman to throw it out.

Woolston, on the other hand, was cock-a-hoop on Tuesday, explaining to the media that:

'I'm walking on sunshine. We are thankful that a small company got its day in court and was vindicated by a jury.'

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