Court rules eBay violated small firm's patent

The U.S. 4th Circuit Court of Appeals has found the eBay infringed the patent of MercExchange Inc. of Great Falls, Virginia and upheld a $25 million judgment against the auction giant. The court was reviewing a previous ruling by a lower court in May 2003 that stemmed from a September 2001 lawsuit by the Virginia-based company over lost licensing fees.

The court upheld a ruling that eBay's Buy It Now which allows sellers to sell at a fixed price feature infringed a MercExchange patent involving no-haggle sales. The court, however, nullified a second patent involving an online price comparison tool.

In the initial case, the lower court found eBay had infringed both patents and ordered the payment of $29.5 million in damages and licensing fees to MercExchange president Thomas Woolston. The invalidated patent, however, caused the higher court to throw out $4.5 million of the initial judgment.

eBay's Buy It Now feature accounts for about 31% of its total worldwide sales. The ruling only applies to U.S. sales, who eBay does not separately report.

The appeals court also lifted a ban preventing MercExchange from getting a permanent injunction against eBay. Woolston's attorney's plan to get a permanent injunction blocking eBay from using the Buy It Now feature and to add $100 million in damages to cover the two years since the initial judgment.

Although Woolston initially had hoped to get eBay to pay him damages and to agree to license his invention, but his lawyers say that now they are not sure he will agree to a deal with eBay "given the way they've treated him". He is currently working with Chicago-based Ubid.com and sees the ruling as a victory for inventors and small business owners. He sees this as an opportunity to "build a better, faster eBay".

In the mean time, eBay plans to continue to fight the lawsuit. eBay has asked the US Patent and Trademark Office (PTO) to look into MercExchange's claims. The company says that the PTO has found "that substantial questions exist regarding the validity of MercExchange's claims. The Patent and Trademark office has already initially rejected all of the claims of one of MercExchange's patents".

eBay People's Court case 03/15/05

The case involved a buyer (Plantiff) who had purchased what was proported to be a World War II German helmet. The buyer is a WWII collector and claimed it was not a German helmet, but was a modified Spanish helmet. Aparently Spanish helmets are worth about 25 cents, but the buyer paid around $325 for it.

The Plantiff said it had too many rivets to be German and contained dimples where a Spanish ensignia would have been placed. He also brought in what he claimed was a genuine German helmet.

The Defendant's response to the buyer's lawsuit: "Moron".

The Defendant claimed her father (who was her witness) had bought it for a friend of the family off eBay, but the friend then didn't have the money to pay for it, so she put it on eBay for her father. She had listed that the headliner appeared to be newer and that the helmet appeared to be authentic (or something to that effect).

The Judge's decision:

The judge made several calls including to the Holocaust museum and to Sotherby's who referred her to someone who admitted he was not an expert and whom the Plantiff had consulted a few weeks before the case. He did not think it was genuine.

The judge (who said she found out more about German helmets than she ever wanted to know) pointed out three things in her ruling. One is that the emblem on the side of the helmet appeared a lot newer than the genuine helmet the Plantiff brought in. Second was that the rivets appeared buffed down and she said there is a whole industry to try and make Spanish helmets appear as genuine German helmets. The third and most damning piece of evidence was the dimples which no authority says are supposed to be on a German helmet.

Judgement for the plantiff. The helmet went back to the defendant. The judge threatened the seller not to resell it as a German helmet because "I will find you". Also, legal consultant Harvey Levin said too that now that she knows it's not genuine, it would be fraud.

When asked what they would do with the helmet, the answer was give it back to her father's buddy.

Now here's an idea: eBay auction "People's Court World War II helmet" I mean, how many helmets have ever been at the center of a People's Court dispute?

Buyer turn offs

Over on the Seller Central board on eBay's Community forums, there is a thread called "What is the biggest buyer turn off in your opinion?" Here are some of the things mentioned as turning off perspective buyers:

Lack of good pictures/descriptive information or stock photos. Be sure to take clear photos that accurately represent the item. Provide as much information as possible that a buyer would need to make a decision to purchase your item.

Tacked on fees for bank conversions Be sure to list up front all fees within your listing.

Outrageous Shipping Costs Most buyers are not fooled by low priced items and high shipping charges. Not only is doing so against eBay's User Agreement, but it will keep buyers from bidding on your auctions. Many buyers mentioned this one.

Not receiving an invoice or an email stating item was shipped Always maintain a reasonable level of contact with the buyer to let the know when the item will be shipped and provide tracking information, if applicable to allow them to know when it will be arriving.

No stated shipping and handling costs Always make all costs clear to buyers, as if you don't make online shopping convenient to buyers, they will take their business elsewhere. This is one of the most frequently mentioned complaints.

Flat rate shipping and handling I can understand why this one was mentioned by one buyer, however I generally use a flat-rate with a small handling fee included (not usually more than about $2) based on the longest distance UPS Ground for my ground packages, but for lighter USPS ones, I use a shipping calculator. On the occassions where shipments may be combined, I am happy to do so, and pass the savings on to the buyer.

Reserve auctions This is another major turn off for many buyers. As a seller, I do use reserves to stimulate interest, but I state my reserve within the auction listing.

Negative Terms of Services Try to say what you have to in the most positive way and remove items that are unnecessarily adversarial.

As is or All sales final in Terms of Services At the very least, you must accept returns on items which are damaged or defective.

Sob Story People are buying to purchase an item, not to support a sick child and will be turned off if you make your personal problems a part of the auction.

Bad feedback and unprofessional replies to bad feedback Try you best to resolve problems in a way that will avoid negative feedback to begin with. If you do receive negative feedback however, carefully consider your response. Respond only with facts and don't resort to name-calling and personal attacks. You cannot change your remarks once they are posted.

Long Terms of Services Try to condense what you say into as few words as possible. Buyers will hit the back button if you write a novel.

Poor grammar Carefully check what you write for spelling, grammar and other errors. These make the listing look very unprofessional.

TOS states "No 0 FB bidders" I personally believe sellers should have the right (especially on high-ticket items) to sell to whom they wish, but it might not serve you well to block out buyers simply because they have no feedback.

Seller has "Private" FB Immediately, this is a red flag. The best thing to do is to try to keep your feedback good to begin with and where necessary, respond to negative feedback professionally.

Sellers who don't ship quickly Although Paypal allows 7 days to ship the item and federal law allows 30 days, it is best to ship the item within one to two business days and if you cannot do this, imform the bidders in your listing. Buyers buy online because it is convenient, but it is not conenient to have to wait extended periods of time for your item.

Keyword spamming Only use keywords that actually describe the item being sold and no more.

Crude, rude or lewd user ID Your business name provides an important part of your identity. You won't be taken seriously you choose an immature or offensive name.

Wave files that start playing as soon as I click on an item Many bidders are on dial-up and it takes a long time for audio and video files and graphics to load. Try to limit the file size and screen size of your pictures to reduce loading time and to make your listing more navigible and in general, any web page should not open with music or sound unless the user was expecting it. This adds to the download time and is distracting for the reader. And this goes ten times for unnecessary video.

Also consider the color scheme and background and whether it will be easy to read. Text on a solid background with contrasting brightnesses is much easier than text on a photo.

Blatantly false claims -- like claiming that "nickel silver" is a kind of silver Check out all of the claims made in your auction and be honest with your bidders. If you can't substantiate a claim, don't include it.