eBay modifies fixed-price feature after losing patent suit

Fined $29.5 million in federal district court for infringing on a patent related to its fixed-priced purchasing mechanism in online auctions, eBay Inc. says it will modify its fixed-price Buy It Now feature to avoid future infringement claims. Fixed-priced sales account for 22% of revenue and 32% of listings, the company says.

EBay, which managed to avoid a court injunction that would have forced it to immediately discontinue using its Buy It Now feature, declines to say how it will modify its fixed-price technology. “We can make some minor modifications to the fixed-priced portion of the business,” a spokesman says. “At this point we will decline to disclose the options we are considering, but we believe the steps will be transparent to the users.”

The lawsuit was brought by inventor Thomas G. Woolston, who owns a technology-licensing company, MercExchange, in Great Falls, VA. In May, a federal jury in U.S. District Court in Norfolk, VA, found that eBay willfully infringed on Woolston’s patent by offering its Buy It Now fixed-price option. Lawyers for Woolston say he plans to appeal the court’s refusal to grant an injunction to force eBay to stop offering its Buy It Now feature.

The court action could have been much worse for eBay, which avoided stiffer financial penalties as well as an injunction. “We are pleased with the court’s ruling, even though it’s not 100% in our favor,” the spokesman says.

The ruling by U.S. District Court Judge Jerome B. Friedman rejected Woolston’s argument that eBay’s entire auction system infringed on his patent. Moreover, the court award against eBay was less than the $35 million recommended by the jury, and the judge rejected the option of tripling damages. Damages could have been tripled because the jury found eBay willfully infringed on the patent.