Judge says eBay can keep using 'buy it now'

A US district court declines to issue an injunction against eBay's 'buy it now' feature, but permits efforts to obtain a patent infringement award from eBay.

A U.S. district court judge has ruled that eBay Inc. can continue to use its "buy it now" feature even though a patent infringement ruling against the feature continues to stand.

Judge Jerome Friedman of the U.S. District Court for the Eastern District of Virginia denied an injunction request by MercExchange, which successfully sued eBay for patent infringement in 2003. But Friedman also said he would move forward with MercExchange's efforts to collect the US$25 million patent infringement award against eBay.

If Friedman decides eBay has not designed around the patent, MercExchange could collect "hundreds of millions" of dollars in ongoing infringement fees, said Gregory Stillman, MercExchange's lawyer and a partner in the Hunton & Williams law firm.

"The functionality of 'buy it now' is exactly the same as it was four years ago," Stillman said Monday.

MercExchange spokesman Michael Caputo called eBay a "rank infringer."

An eBay representative wasn't immediately available for comment.

MercExchange may appeal the district court decision on the injunction, Stillman said. That would continue a long battle between the two companies, one in which the U.S. Supreme Court has gotten involved.

The district court originally denied MercExchange's request for a permanent injunction, but the Virginia company appealed the ruling.

The U.S. Court of Appeals for the Federal Circuit took the case and granted MercExchange an injunction, continuing the court's long-standing practice of granting injunctions in nearly every patent infringement case. But the Supreme Court, in May 2006, overturned the appeals court ruling, saying judges must weigh several factors before granting an injunction.

The Supreme Court sent the case back to Friedman to determine whether an injunction was warranted.

Friedman ruled that the injunction request did not pass the four-part test now required by the Supreme Court. MercExchange has tried to sell patent licenses and its patents to other companies, suggesting that monetary damages are adequate, Friedman wrote.

Since the original judgment in the case, U.S. Patent and Trademark Office has also issued two interim findings that the MercExchange patent is invalid, Friedman wrote.

A permanent injunction would also hurt the public, the judge wrote.

"EBay is a multi-billion dollar corporation whose online marketplace brings together tens of millions of buyers and sellers around the world and eBay unquestionably has a substantial impact on the United States' economy," he wrote. "In contrast, MercExchange is a company with two employees that work out of their homes and appear to specialize in litigation and obtaining royalties based on the threat of litigation."

The district court's ruling on the injunction isn't surprising, given the Supreme Court decision and district court's original ruling, said Sarah King, a partner in Howard Rice Nemerovski Canady Falk & Rabkin PC's intellectual property litigation group in San Francisco.

But the ruling is part of a "creeping sea change" in patentholder rights since the Supreme Court ruling, she said. "No longer will patentholders necessarily have the power to shut a company down for patent infringement," she said. "It really removes from the quiver of the patentholder a very powerful arrow that they hold against infringers."

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