Judge denies MercExchange injunction in eBay case

SAN FRANCISCO (Reuters) - A U.S. federal judge denied a request on Friday for a patent injunction against eBay Inc. (EBAY.O: Quote, Profile, Research, Stock Buzz), but moved to the final stages of allowing a $25 million damage award against the online auctioneer.

In a mixed outcome, the U.S. District Court for the Eastern District of Virginia in the nearly six-year-old case of MercExchange LLC v eBay Inc. and Half.com Inc. denied a motion for a permanent patent injunction against eBay.

The ruling by the Norfolk, Virginia-based court came after the U.S. Supreme Court remanded the case back to the lower court in May of 2006, saying that the district judge must scrutinize patent cases closely before issuing an injunction barring companies from using infringing technologies.

But Judge Jerome Friedman denied eBay's request to stay proceedings on one of the two patents in the case -- governing the so-called 'Buy It Now' feature -- saying that the U.S. Supreme Court ruling had no impact on a 2003 jury verdict that could result in eBay paying $25.5 million in damages.

"At such a late stage in the trial proceedings, the court does not favorably view further delay predicated upon an administrative process of indeterminate length," Friedman said.

The "infringement suit has already been tried by a jury and a final verdict and damage award has been affirmed by the federal circuit," the decision stated.

The judge stayed further proceedings on a second ecommerce-related patent until the U.S. Patent and Trademark Office has time to reexamine the validity of the patent granted to MercExchange. In effect, the court deferred to the judgment of the patent office to define the issue.

EBay said in a quarterly financial filing with the U.S. Securities and Exchange Commission on Friday that it modified how its Web sites work to try and ensure that they no longer make use of any potentially offending technology.

It has also previously set aside financial reserves to cover the costs of the litigation and potential damages.