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EBay settles patent fight

February 29, 2008|From the Associated Press

EBay Inc. has settled a seven-year patent dispute with MercExchange that prompted an important intellectual-property ruling from the U.S. Supreme Court.

The San Jose-based online auction company said Thursday that it had bought the three MercExchange patents it had been accused of violating. The price was not disclosed, but EBay said the amount would not materially affect its financial results.

Great Falls, Va.-based MercExchange sued in 2001, arguing that EBay's "buy it now" option -- which lets sellers make items available at set prices -- infringed its patents.

MercExchange's founder, patent lawyer and engineer Thomas Woolston, had patented technologies related to an electronic network of consignment stores.

A jury ruled in MercExchange's favor in 2003, awarding $35 million in damages. A judge reduced the award to $25 million, but with interest the penalty had reached $30 million by December, when a federal judge certified the penalty and EBay was threatening to continue appealing.

MercExchange had hoped to win a court order preventing EBay from continuing to use the technology. It pursued that quest to the Supreme Court, which ruled in 2006 that judges do not necessarily have to block a technology from being used when a jury finds a patent violation.

EBay said the settlement would end all claims by MercExchange. In addition to the three patents involved in the case, EBay said it would license other technologies from the company.

Woolston said in an interview that he settled rather than continue to endure appeals by EBay.

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