A district judge ruled July 27 that eBay Inc. can continue to use its “Buy it Now” feature despite having been found to have borrowed its design from another company's patent.

Judge Jerome B. Friedman denied MercExchange's request for a permanent injunction, noting that “MercExchange has utilized its patents as a sword to extract money rather than as a shield to protect its right to exclude or its market-share, reputation, goodwill or name recognition, as MercExchange appears to possess none of these.”

MercExchange filed for two patents in 1995, one for online auctions and one for a feature like eBay's direct-buy “Buy it Now” option. Unable to keep up with eBay's domination in the online auctions market, MercExchange got out of the online auction business in 2000. In 2003 a jury found eBay had willfully infringed MercExchange's patents and awarded MercExchange $25 million for the “Buy it Now” patent, while invalidating the auction patent as obvious. (In the most recent opinion, the Eastern District of Virginia denied eBay's motion for stay pending reexamination.)

MercExchange moved for a permanent injunction, and in 2006, after several appeals, the Supreme Court ruled that a permanent injunction does not automatically apply in infringement findings. The Court remanded the case to the U.S. District Court for the Eastern District of Virginia so that it could apply the traditional four-factor equitable test as the proper standard for deciding whether to issue an injunction. That test looks at whether the plaintiff will experience irreparable injury, the adequacy of money remedies, the balance of the hardship on plaintiff and defendant and the public interest.

Friedman found the first factor considered–irreparable harm–weighed against entry of an injunction because MercExchange had at one point entered licensing negotiations with uBid.com over the patent and also offered to license its patents to eBay for the right price. According to the court, precedent indicates “irreparable harm is clearly negated by a finding that the patentee was willing to forgo its right to exclude by licensing the patent.”

In addition, Friedman wrote that since MercExchange is no longer in the business of online auctions, it “has no reputation to protect, no goodwill or brand recognition to protect, no customer base to retain, no well-established licensing program to follow and no current royalty stream to maximize.”

A district judge ruled July 27 that eBay Inc. can continue to use its “Buy it Now” feature despite having been found to have borrowed its design from another company's patent.

Judge Jerome B. Friedman denied MercExchange's request for a permanent injunction, noting that “MercExchange has utilized its patents as a sword to extract money rather than as a shield to protect its right to exclude or its market-share, reputation, goodwill or name recognition, as MercExchange appears to possess none of these.”

MercExchange filed for two patents in 1995, one for online auctions and one for a feature like eBay's direct-buy “Buy it Now” option. Unable to keep up with eBay's domination in the online auctions market, MercExchange got out of the online auction business in 2000. In 2003 a jury found eBay had willfully infringed MercExchange's patents and awarded MercExchange $25 million for the “Buy it Now” patent, while invalidating the auction patent as obvious. (In the most recent opinion, the Eastern District of Virginia denied eBay's motion for stay pending reexamination.)

MercExchange moved for a permanent injunction, and in 2006, after several appeals, the Supreme Court ruled that a permanent injunction does not automatically apply in infringement findings. The Court remanded the case to the U.S. District Court for the Eastern District of Virginia so that it could apply the traditional four-factor equitable test as the proper standard for deciding whether to issue an injunction. That test looks at whether the plaintiff will experience irreparable injury, the adequacy of money remedies, the balance of the hardship on plaintiff and defendant and the public interest.

Friedman found the first factor considered–irreparable harm–weighed against entry of an injunction because MercExchange had at one point entered licensing negotiations with uBid.com over the patent and also offered to license its patents to eBay for the right price. According to the court, precedent indicates “irreparable harm is clearly negated by a finding that the patentee was willing to forgo its right to exclude by licensing the patent.”

In addition, Friedman wrote that since MercExchange is no longer in the business of online auctions, it “has no reputation to protect, no goodwill or brand recognition to protect, no customer base to retain, no well-established licensing program to follow and no current royalty stream to maximize.”