EBay Wins a Round in Patent Dispute

Online auction giant EBay Inc. has won a round in a patent-infringement battle over the technology behind its “buy it now” feature.

An appeals court this month upheld a $25-million verdict against EBay in a suit filed by MercExchange, which claimed that the larger company was improperly using its technology. But on Tuesday, the U.S. Patent and Trademark Office issued an initial finding that one of MercExchange’s patents underlying the case should be revoked.

EBay said the patent office had dealt its opponent a serious blow. “EBay has maintained all along that the patents are not valid, and the patent office seems to agree,” said Jay Monahan, EBay’s vice president of intellectual property.

EBay had asked the patent office to review three patents awarded to Great Falls, Va.-based MercExchange. The agency determined, in its initial finding, that the smaller company’s fixed-price patent application covered information that was an “obvious” variation of other known inventions.

MercExchange lawyer Scott Robertson said the patent office was relying on a view that was rejected in the March 16 decision by the U.S. Court of Appeals for the Federal Circuit in Washington that upheld the verdict against EBay.

“It’s based on a reference that was specifically addressed by the Federal Circuit in its recent ruling,” Robertson said in an interview. “We plan on pointing all of this out to the patent office, including the Federal Circuit’s binding precedent on this very point.”

Monahan said the issues were different, with the appeals court ruling on whether there was sufficient evidence to support the jury verdict and the patent office deciding whether the patent should have been issued.

Shares of EBay rose 19 cents to $36.10 on Nasdaq.