Ebay receives stay of execution in one-click patent spat

A US district court judge has denied a motion for an injunction that would have blocked Ebay from offering users its " buy it now feature" for an alleged patent violation.

In his 50-page ruling, Judge Jerome Friedman also denies a request by Ebay requesting a delay in the proceedings pending further investigations.

The case centers around Merc Exchange patents concerning the "buy it now," feature used on Ebay and other online auction sites.

A jury in 2003 ruled in favor of Merc Exchange and awarded the company $25m in damages. By default, a permanent injunction was also granted, forbidding Ebay from using the feature.

Ebay challenged the injunction, and in a 2006 www.vnunet.combroke with the practice of the automatic injunction. Because Merc Exchange doesn't sell any product covered by its patent, the company doesn't suffer any direct damages that warant such a harsh penalty. 

Friedman upheld the decision to void the injunction, noting that the claims of "irreparable damages" were doubtful. The judge cited Merc Exchange's decision not to seek a preliminary injunction, combined with the decision to licence the same patent to rival auction site uBid, in making his ruling.

"MercExchange’s harm, although real, appears compensable in money damages as the timing of MercExchange’s post-trial, discussions with uBid is suspicious," Friedman wrote.

"Tellingly, in the wake of a favorable jury verdict MercExchange had the perfect opportunity to change course and seek to develop its patent or at a minimum defend its right to exclude; instead, MercExchange chose to publicly declare that its goal was to sell off its intellectual property rights."

The ruling wasn't all good news for Ebay. Although the company can continue to use the feature, it is still on the hook for the monetary damages.

Friedman upheld the 2003 decision, taking MercExchange one step closer to collecting damages. Ebay had asked the judge to suspend the proceedings to allow it to continue its investigation into challenging the patent.

Friedman instead split the two patents into separate cases, allowing action to go forward on the non-affected patent.

Both sides are claiming victory following the ruling.

In a written statement provided to vnunet.com, Ebay said that it was " extremely pleased" with the decision to deny the injunction and split the two patents.

Greg Stillman, the attorney representing Merc Exchange, told vnunet.com that while the denial of the injunction was disappointing, the company was " delighted" with the other patent advancing.

Ebay, meanwhile, said that it expects both patents to soon be invalidated by the US Patent and Trademark Office (USPTO).

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