By Jeff St. Onge and Susan Decker
Bloomberg News
Wednesday, June 13, 2007

EBay, the world's largest online auctioneer, must wait to find out whether a judge will order it to stop using a Great Falls company's patent for online shopping.

U.S. District Judge Jerome B. Friedman said in Norfolk yesterday that he won't immediately rule on whether MercExchange can block eBay from using its Buy it Now feature. A jury found in May 2003 that eBay infringed MercExchange's patent. The fight is over a technique that allows a customer to buy a product at a fixed price rather than through auction bidding.

Friedman asked eBay at a hearing to submit the language it would propose he use in any such order, in the event he rules for closely held MercExchange.

"I haven't made any ruling yet," the judge said. "But if I do, I would like to see what eBay's position is."

The dispute, which began in 2001, led to a landmark Supreme Court ruling that said patent owners can't always keep an infringer from using their inventions.

After eBay lost at the trial, Friedman refused to order it to abandon the technique. An appeals court said he must issue the order, following a decades-old principle that court orders to stop patent infringement are virtually automatic.

But then the Supreme Court disagreed, granting judges discretion on such orders without addressing the underlying issues in the case.

EBay, based in San Jose, said in its annual report that it has changed some functions on its Web site to avoid infringing the patent and that it doesn't think any order would hurt its operations.

MercExchange has argued that it was entitled to a blocking order to protect its ability to license its patent.

"There is no question that granting injunctive relief will not only honor the rights of the patent holders but may be the only way competition can be introduced into this marketplace," Seth Waxman, a lawyer for MercExchange, told Friedman.

The U.S. Patent and Trademark Office is reviewing the validity of two MercExchange patents. In preliminary findings, it said the patents shouldn't have been issued.

Friedman said he'll consider eBay's request to put the case on hold until the review is completed.

EBay shares fell 53 cents yesterday, to $30.96