Ebay agrees to pay up for 'Buy It Now'

SAN JOSE, Calif. (AP) -- EBay Inc. has settled a seven-year patent dispute with MercExchange LLC that prompted an important intellectual-property ruling from the U.S. Supreme Court.

The online auction company said in a statement Thursday that it bought the three MercExchange patents it had been accused of violating. The price was not disclosed; eBay (EBAY, Fortune 500) said the figure would not materially affect its financial results.

Great Falls, Va.-based MercExchange sued eBay in 2001, arguing eBay's "Buy It Now" option -- which lets eBay sellers make items available at set prices -- infringed on MercExchange patents. MercExchange's founder, patent lawyer Thomas Woolston, had patented technologies related to an electronic network of consignment stores.

A jury ruled in MercExchange's favor in 2003, awarding $35 million in damages. A judge reduced the award to $25 million, but with interest the penalty had reached $30 million by December, when a federal judge certified the penalty and eBay was still threatening to continue appealing.

MercExchange had hoped to win a court order preventing eBay from continuing to use the technology and pursued that quest to the Supreme Court, which ruled in 2006 that judges do not necessarily have to block a technology from being used when a jury finds a patent violation.

EBay said the settlement would end all claims by MercExchange. In addition to the three patents involved in the case, eBay said it would license other technologies from MercExchange.

EBay spokeswoman Kim Rubey said she could not elaborate.

A spokesman for MercExchange did not immediately return a call.