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Last Updated: Wednesday, 29 March 2006, 10:45 GMT 11:45 UK
eBay fights shutdown court threat
eBay logo at its headquarters
eBay says it is open to victimisation
Online auction house eBay goes to the US Supreme Court on Wednesday to prevent one of its core services being shutdown over a patent dispute.

It is up against small US technology firm MercExchange, which successfully argued in a lower court in 2003 that eBay had infringed two of its patents.

The dispute relates to eBay's continued use of its popular "Buy it Now" tool.

eBay argues that judges should be able to deny injunctions in patent cases and instead choose to fine the perpetrator.


The auction house says the current threat of firms having their services immediately closed down if they are found guilty of patent abuse is unfair.

Three people using Blackberry mobile device
Blackberry settled its patent case out of court

It further adds that it leaves large technology companies such as itself open to victimisation and attack from small "patent trolls", who use the threat of immediate shutdown orders to force out-of-court settlements for huge sums of money.

MercExchange counters that patents need to be properly protected and the current injunction system should be kept in place.

ebay claims that since the first 2003 court case it has sufficiently altered its "Buy it Now" tool to avoid breaching MercExchange's patents, but MercExchange disagrees.

The eBay versus MercExchange case comes three weeks after Research In Motion (RIM), the maker of the Blackberry email device, reached an out-of-court settlement in a similar patent dispute.

Canadian firm RIM faced the prospect of the Blackberry service being shut down in the US after American patent-holding company NTP said RIM had copied some of its technologies.

RIM eventually agreed to pay NTP $612.5m (349m) to settle the dispute.

New precedent

The eBay versus MercExchange case is being closely watched by both the wider technology and pharmaceutical industries, as a verdict in favour of eBay would set a new precedent.

While other technology firms such as Amazon, Xerox and Time Warner have written to the Supreme Court in support of eBay, the drugs industry has sided with MercExchange's argument.

Patent lawyer Steve Maebius said the case could have a profound effect.

"Any time we talk about altering injunctions, we really are talking about altering the fundamental balance of power," he said.

The Supreme Court is expected to take several months before it reaches its verdict.

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