MercExchange filed a lawsuit against online auction giant eBay in 2001 claiming eBay’s “Buy It Now” infringed on MercExchange patents and technology. In 2003 a jury awarded MercExchange $35 million in damages. The judge reduced the jury award to… $25 million. A federal judge certified the penalty and eBay threatened appeal.
During the above proceedings MercExchange tried to block eBay’s use of “Buy It Now”. In 2006 the Supreme Court made a landmark decision to allow eBay to continue use of “Buy It Now”. Before this ruling patent owners were virtually always granted court orders to block infringements. These actions to block use typically lead to faster more lucrative settlements for the patent owners.
Since the Supreme Court ruling in eBay’s favor, judges throughout the US have denied requests for court orders to block use where the infringer was not a competitor of the patent owner.
Financial terms of the settlement were not disclosed by either party. EBay said it would buy three patents from MercExchange related to “Buy It Now”/fixed priced sales as well as related technology. EBay General Counsel Mike Jacobson stated “The agreement gives us access to additional intellectual property that will help improve and further secure our marketplaces.”
This Supreme Court decision adds a new aspect to the trend written about previously on this blog whereby infringers are strategically using the court system to buy intellectual properties and/or licenses to use intellectual properties.