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eBay 'Buy It Now' button survives latest attack

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Rest easy, eBay addicts. You can still log on to the world's most famous auction site and "Buy It Now." MercExchange, that pugnacious patent holder in Great Lakes, Virginia, has failed in its latest attempt to shut down the nifty little eBay button that lets you purchase items before an auction plays itself out.

Last month, more than four years after a federal jury found that eBay's "Buy It Now" button infringed on its patent, MercExchange called on U.S. District Judge Jerome Friedman to slap an injunction on "Buy It Now", and on Friday, Judge Friedman denied the request, Reuters reports. As you might expect, MercExchange is leaning towards an appeal.

"We haven't formally made that decision," MercExchange lawyer Greg Stillman told The Reg. "But I think it is likely that we will appeal the denial of the injunction. We still have a few things we have to do with Judge Friedman first."

MercExchange sued eBay over "Buy It Now" in 2001. Two years later, a District Court jury awarded the two-person company $35m in damages - later reduced to $25m - but Friedman refused to shut the service down with an injunction. On appeal, the U.S. Court of Appeals for the Federal Circuit did issue an injunction, arguing that, historically, such an order almost always followed a finding of patent infringement. Then the case bounced up to the Supreme Court.

In what everyone called a landmark ruling, the highest court in the land argued that an injunction may or may not be necessary in such cases and kicked the MercExchange suit back to District Court. It marked a sea change in patent law, and once again, the fate of Buy It Now landed in the hands of Judge Friedman. The case had slowed as the U.S. Patent office conducted a review of the MercExchange patent, but then the company popped back up with another injunction demand.

With Friday's ruling, Judge Friedman once again declined to issue an injunction, arguing that MercExchange is what's often referred to in patent law as a "troll" - a company whose main objective is to use its patents in suits against other business, not as a means of getting ahead in the marketplace. "MercExchange's modus operandi appears to be to seek out companies that are already market participants that are infringing, or potentially infringing, on MercExchange's patents and negotiate to maximize the value of a license, entered into as a settlement to, or avoidance of, litigation," he wrote. The company, he argued, can be compensated solely with an award of monetary damages.

This is another big win for tech companies looking to protect their businesses from the troll factor. "So many companies are subject to suits from patent trolls that seek to use the power of injunctions to shut them down, and this is particularly true in the technology area, where a single technology can effect hundreds if not thousands of patents," says Sarah King, an intellectual property lawyer with the San Francisco Howard Rice Nemerovski Canady Falk & Rabkin PC. She represented Blackberry-maker RIM in filing an amicus brief in support of eBay. "If there is one patent holder out there you didn't know about and you're infringing on their exclusive rights, they can use an automatic injunction to essentially extract the entire value of your product - even if their patent represents only a small part of the product."

But it's hardly the end of the MercExchange case. Judge Friedman must still issue a final judgment that specifies how much eBay is required to pay the two-man Virginia company. Since the jury's original ruling, eBay has continued to use Buy It Now, and it may be required to pay additional damages for that extra four years. And once Friedman's final judgment arrives, MercExchange will likely appeal. Yes, this would take the case back to the U.S. Court of Appeals for the Federal Circuit, the court that already issued an injunction against eBay. But that doesn't mean it will rule the same way next time around. The Supreme Court has changed the playing field. ®

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