BOSTON (06/01/2000) - Online auction sites eBay Inc. and Bidder's Edge Inc. are at the center of a fierce war, but this one won't be won by the highest bidder.
On May 24, U.S. District Court Judge Ronald Whyte barred Burlington, Massachusetts-based Bidder's Edge from using an automated system to search eBay on the grounds that it could slow the auction giant's site. The injunction goes into effect June 8.
By week's end, Bidder's Edge had appealed the decision in San Jose Federal District Court.
The stakes are high for both companies, and the outcome could weigh heavily on their futures, said analysts.
"EBay, as the gorilla in online auctions, has captured a majority of the auction content on the Internet," said Vernon Keenan, an Internet analyst at Keenan Vision Inc. in San Francisco. EBay is fighting aggregator sites to retain control of its community of bidders and content, he said.
The decision could also have broader implications for the openness of the Internet, because it relies on laws against trespass, not copyright infringement.
Jonathan Moskin, an intellectual property lawyer at New York law firm Pennie & Edmonds, said the judge's ruling expanding the definition of trespassing on physical property to include the Internet is controversial because it has never been applied online.
The war began back in December, when eBay filed suit against Bidder's Edge, claiming that it violated eBay's copyrights and intellectual property. Bidder's Edge is one of many auction aggregator sites that search various online auctions with software robots, then report the results to customers.
In February, Bidder's Edge countered eBay's suit with its own antitrust lawsuit, alleging that eBay is trying to monopolize the online auction market.
The U.S. Department of Justice antitrust division is investigating the matter.
Whyte's 22-page ruling last month was very narrow. In his order, he denied eBay an injunction based on its allegations that Bidder's Edge violated its copyright and trademark rights. Instead, he said, Bidder's Edge can't search eBay's database using a software robot because it could disrupt eBay's system.
"The law recognizes no such right to use another's personal property," Whyte wrote.
But he didn't preclude Bidder's Edge from accessing information from eBay by other means.
Keenan backed Whyte's opinion, saying that eBay has a right to shield its content.
"I don't think that there is any public domain right to that information that eBay's collected," he said. "I think they have the right to protect their business."