Auction giant eBay is being sued by the owner of a patent that covers the “method and apparatus for facilitating internet commerce through internetworked auctions” and, according to CNet News, eBay has warned investors that, if it loses, the case could be very damaging.

The apparent inventor, Thomas Woolston, assigned the patent rights to his company, MercExchange, which now holds the rights to four internet auction patents. Woolston claims that eBay contacted him in 2000 with a view to buying his patents. When negotiations broke down, eBay began wilfully infringing, according to the lawsuit.

CNet reports that a recent eBay regulatory filing warns that, if MercExchange wins, “we may be forced to pay significant damages and licensing fees, modify our business practices or even be enjoined from practicing a significant part of our US business.”

A trial is scheduled for 12th November 2002.

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