Ebay’s settlement with MercExchange

After several years of battles in the media and the courts, Ebay has finally settled with MercExchange. Originally, MercExchange’s founder, patent lawyer and engineer, Thomas Woolston argued in court that Ebay was illegally infringing on various patents that he had created. One of the patents in questions was the very popular “Buy it Now’ technology prominently featured on many Ebay auctions. Woolston promised to do everything in his power to have the courts issue an injunction against Ebay. His goal was an immediate injunction to prevent Ebay from using the “But it Now” feature until they promised to pay for the license. Spokesmen for MercExchange argued in court that Tom Woolsten invented this patent before Ebay was a twinkle in investor’s eyes. Ebay countered that Woolsten was jumping on the bandwagon and trying to rob the company for as many millions as the legal system allowed. Woolsten wasn’t going to stop there, if his “Buy it Now” patent successfully held up in court he was going to go after Ebay and others for additional patents. He mentioned first Ebay, then Amazon and who knows how many. It is debatable if Woolsten actually did invent these patents as Ebay’s lawyers argued that long before Woolsten patented this feature some people were using this technology on the internet for their business. Thus the major question was is Ebay telling the truth or Woolsten. After many trials the courts came to the conclusion that Ebay was to pay MercExchange $30 million which was further reduced to $25 million. Ebay was in the process of appealing this decision and stated they believed they had owed MercExchange the lump sum of zero dollars.

Thus on February 28th we were greeted with the news that Ebay has finally decided to purchase these patents and has settled with MercExchange. Why the sudden change of heart? Perhaps President to be Donahue would like to start off fresh and wipe away any old headaches from the past. One can only wonder. Additionally if MercExchange was very disappointed with the $25 million they received what would it have taken to acquire all three patents? 50 million? 75 million? 200 million? Had Ebay acquired all three patents for $25 million you can be sure to have seen a press release stating that “Ebay has prevailed in court by receiving all 3 patents for $25 million. Thus my guess would be the figure Ebay paid was $100 million.

Know that Ebay has possession of the 3 patents will they up their fight against Amazon and take them and other to court for infringement? One can only wonder?

If it did cost $100 million Ebay still came out of the deal way ahead as they know hold the patent technology and can sue other companies at will. Additionally MercExchanges’s goal from the start was to shut down Ebay’s Buy it Now feature and Ebay prevailed. However what happened to all of the work around patent technology that Ebay was promising us if they had lost the court ruling?