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Patent holder calls for eBay 'Buy-It-Now' injunction

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That tiny company in Great Lakes, Virginia is re-launching its attack on eBay’s Buy-It-Now button.

Four years after a federal jury found that eBay had infringed on its patent, MercExchange LLC has asked the court to shutdown Buy-It-Now, a service that allows eBayers to purchase items at set prices, without bidding at auction. U.S. District Court Judge Jerome B. Friedman has not said when he will rule on the case, the Associated Press reports.

In 2003, the jury awarded MercExchange $35 million in damages - later reduced to $25 million - but last year, the case was argued before the U.S. Supreme Court, and the court ruled that a finding of patent infringement may or may not result in an injunction.

"Historically, the federal circuit said that if infringement is found, an injunction is almost automatic," says Ethan Horwitz, an intellectual property lawyer with the international firm King & Spalding. “But now the Supreme Court has said that an injunction is dependent on all sorts of factors."

The case had slowed as both parties waited for the U.S. Patent Office to re-examine the patent, but MercExchange has now decided to request an injunction before the review is complete. According to Horwitz, a patent reexamination can take upwards of seven years.

MercExchange lawyers have also requested that the judge increase the awarded damages to reflect eBay’s continued use of Buy-It-Now over the last four years. "Even if an injunction isn’t issued, there has to be some sort of damages paid," Horwitz continues. "eBay will likely have to pay over and above what the jury laid out."

Judge Friedman’s decision could go a long ways towards shaping American patent law. With last year’s ruling, the Supreme Court made a clear distinction between patent suits brought by companies that are actively competing in the marketplace and those brought by so-called “trolls” that aren’t active market participants. Injunctions make sense in the first instance, the court ruled, but not the other.

MercExchange falls into a gray area in between. Though eBay argues otherwise, MercExchange claims it's trying to build a business around its patent. “The federal court doesn’t really have clear instructions on how to proceed,” says Horwitz. “There is a hint of competition between these two companies, but no real competition.”®

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