EBay, MercExchange settle long feud over several patents

Computerworld - Ebay Inc. and MercExchange LLC have reached a settlement to dismiss all claims and appeals stemming from a patent lawsuit filed by MercExchange in September 2001, according to a statement issued by eBay today (download PDF).

EBay has agreed to buy the three patents in question, including two patents relating to its popular "buy it now" feature. MercExchange claimed that the feature infringed on its patents.

Financial terms were not disclosed, and eBay said it does not expect the settlement to affect its 2007 results or the 2008 financial guidance it issued on Jan. 23.

As part of the settlement, eBay said it will also purchase some related technology and inventions as well as a license to another search-related patent that was not part of the lawsuit. According to eBay, these assets will allow the company to further enhance its operations and the trust and safety efforts on its e-commerce sites.

"We're pleased to have been able to reach a settlement with MercExchange," said Mike Jacobson, eBay senior vice president and general counsel, in the statement. "In addition to resolving the litigation, this settlement gives us access to additional intellectual property that will help improve and further secure our marketplaces."

Asked to comment on the settlement, MercExchange founder and CEO Thomas Woolston, said, "It seemed like the right time to put it behind us."

MercExchange sued eBay in September 2001 in a dispute over MercExchange's patents and eBay's online auctions and fixed-price-related e-commerce operations.

A jury found May 2003 that eBay had infringed a patent held by MercExchange, which then asked the U.S. District Court for the Eastern District of Virginia to issue an injunction against eBay's use of the feature. The U.S. Court of Appeals for the federal circuit followed its longstanding practice of granting injunctions in intellectual-property cases -- action that is nearly automatic in such lawsuits -- and that paved the way for the Supreme Court to weigh in.

The high court unanimously rejected the appellate court position, but it also said that the district court had used flawed judgment in its decision.

The Supreme Court decision ended the longstanding practice of near-automatic injunctions in such cases, clarifying that lower courts must use a four-factor test when considering patent injunctions.

Information from the IDG News Service was included in this report.