The case has been remanded to a lower court to consider the
validity of another MercExchange patent.
The ruling also asks the District Court to consider whether an
injunction should be imposed on eBay's fixed price and "Buy It Now"
sales – which account for around one-third of its current revenues,
according to reports.
The dispute between eBay and MercExchange has been running since
October 2001, and hinges on an auction site patent application that
was filed a few months before eBay was launched in 1995.
The dispute relates to the "Buy It Now" service on the eBay site,
which deals with fixed price sales, and a facility to search other
on-line auction houses. In May 2003, a jury decided that these
services did infringe Woolston's patents, and ordered the on-line
auction leader to pay $35 million in damages.
The case then went back to the trial judge, who had the option
of increasing the damages awarded – up to three times the existing
award – and issuing a permanent injunction against the company,
preventing eBay from using the patented technology.
In the end he did neither, and in August last year he reduced
the award to $29.5 million and refused to grant an injunction.
EBay appealed, and it is this ruling that was issued on
Wednesday, removing the damages imposed on eBay in respect of the
comparison shopping patent, but upholding the jury's infringement
verdict on the "Buy It Now" patent.
The Appeals Court also raised the spectre of a permanent
injunction against that service, and reversed the District Court's
earlier invalidation of another MercExchange patent. These issues
will now be reconsidered by the District Court.
"This decision sends a clear message to the marketplace," said
Scott Robertson, who argued the case before the court as part of
the Hunton & Williams law firm team that represents
MercExchange. "Intellectual property owners have rights, and the
value of intellectual property will be respected in court."
EBay announced that it was pleased with the ruling, and the
reduction of damages.
"Looking forward," it said in a statement, "we believe 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."
EBay stressed that the
US
Patent and Trademark
Office was reviewing all of the MercExchange patents, and had
already initially rejected all of the claims of one of the
patents.
