EBay settles patent dispute with MercExchange

Dispute included eBay's "buy it now" Web site feature, which MercExchange contended infringed one of its patents

EBay has settled a patent dispute with MercExchange that in 2006 was heard by the US Supreme Court, which sided with the online auction house in what is considered to be an important ruling on intellectual property.

Under terms of the deal, eBay will purchase from MercExchange three patents that were part of a September 2001 lawsuit MercExchange filed, along with additional technology and inventions related to the dispute. EBay will also license a search-related patent portfolio that wasn't part of the lawsuit, the company said Thursday.

Other terms of the agreement are not being disclosed, eBay said. The company does not expect that settlement terms will affect its 2007 financial results or its 2008 financial guidance.

The dispute included eBay's "buy it now" Web site feature, which MercExchange contended infringed one of its patents. A jury found in 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 US Court of Appeals for the Federal Circuit followed long-standing 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 Supreme 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 long-standing practice of near-automatic injunctions in such cases, clarifying that lower courts must use a four-factor test when considering patent injunctions.

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