The ruling gives fresh hope to eBay following an appeal court ruling earlier this month that upheld the bulk of the $29.5 million in damages awarded against eBay and raised the spectre of an injunction being imposed upon eBay's fixed price and "Buy It Now" sales.
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 case has now been remanded to a lower court for consideration as to the validity of another of MercExchange's patents, and on the question of an injunction.
Alongside the infringement action, the USPTO has been re-examining the three patents initially founded on in court by MercExchange and in February issued a preliminary finding that one of these, relating to on-line consignment auctions, was invalid.
According to eBay, the USPTO has now issued a preliminary verdict on the "Buy It Now"-related patent, finding that all of MercExchange's claims in respect of the patent are "obvious" or otherwise unpatentable.
"The Patent Office rulings have put a major cloud over MercExchanges's key patents," said eBay Vice President of Intellectual Property, Jay Monahan. "eBay has maintained all along that the patents are not valid, and the Patent Office seems to agree".
MercExchange does not.
"Such first office actions are typical in a re-examination proceeding, and only invite the patent owner to distinguish the asserted prior art. We intend to do so on the very basis of the Federal Circuit's decision, among other things," said Thomas Woolston, the patent's inventor and a principal of MercExchange. "We will deal with this office action, like all previous office actions during the prosecution of our patents, in the ordinary course."
The validity of patents can be a difficult and technical issue, but it is recognised that where the feature being patented is already in the public domain – known as "prior art" – then it cannot be patented.
