A US district judge has penned the latest chapter in eBay's long-standing patent infringement battle with MercExchange LLC. Since 2003, eBay has been fighting a jury's decision that its Buy It Now feature infringes on two patents held by MercExchange, originally an auction site itself over a decade ago. eBay fought off an injunction earlier this year, but the judge's ruling today orders eBay to pay $30 million to MercExchange, LLC.
This patent dispute hails all the way back to 2001 when licensing talks broke down between eBay and Tom Woolston, founder of MercExchange. Woolston promptly filed suit against eBay, fighting for an injunction to stop the service from using the feature. A US District Court sided with MercExchange in 2003, but eBay's appeals eventually escalated the case up to the Supreme Court, where the focus shifted and subsequently garnered the attention ofIP lawyers in everythingfrom the software industry to thepharmaceutical business.
At issue before the Supreme Court was whetherpatent infringement should necessitate injunctions to stop companies from distributing their products. This meant much higher stakes were on the table.Todd Dickinson, GE's vice president of intellectual property, even called it "the most important commercial law case before the Supreme Court so far this century."
The Supreme Court sided with eBay in 2006, ruling that patent infringement does not automatically warrant a permanent injunction. In July of this year, Judge Jerome B. Friedman noted the fact that MercExchange hasn't been operating as an auction site for quite some time,along withthe company's obvious attempts to use its patents as a revenue-generating crutch. With that in mind, Friedman dismissed the possibility of an injunction, ruling that eBay could continue using its Buy It Now feature.
The greater industry win from eBay's battle with MercExchange has been the establishment of injunction boundaries in patent suits. However, the fact that the battle took so long and that eBay still owes $30 million is an ugly reminder of the state of software patents. Naturally, eBay plans to appeal the ruling.