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A $35 million jury verdict against eBay Inc. once again casts a spotlight on the scope and validity of business method patents. A jury in the Eastern District of Virginia found Tuesday that eBay willfully infringed two patents held by MercExchange, a company founded by former patent lawyer Thomas Woolston to license his patents. The patents cover posting goods for sale in an electronic marketplace and comparison shopping on the Internet. “This court seems to favor the validity of business method patents,” said Rajiv Patel, a partner at Fenwick & West. “Now the issue comes down to whether the judge will let the verdict stand and, if not, it will be up to the Federal Circuit [U.S. Court of Appeals] to determine if the patent scope can stand and if the patent is valid.” Scott Robertson, a partner at Hunton & Williams who represents Woolston, said the jury’s finding “implicates 26 percent of eBay’s total revenues,” which consist of the company’s fixed price sales. “We don’t accept that,” said Jay Monahan, eBay’s associate general counsel for intellectual property and litigation. “It’s not at all clear even what was found to be infringed, and it’s unclear what it is they considered to be ‘fixed price.’” Monahan said eBay would ask the court to reverse the verdict on the grounds that no reasonable jury could have reached the conclusion that eBay infringed MercExchange’s patents. The company also plans to ask the judge to vacate the verdict and order a new trial, arguing that the verdict was not supported by the weight of the evidence. The company will also ask the court to reduce the damages award, which was based on royalties from gross merchandise sales. Monahan said individuals sell products on eBay and the company gets a fraction of the money from such exchanges, so it should not pay a royalty on money it never sees. Woolston, who once worked for the National Security Agency and the Central Intelligence Agency, was a lawyer at Hunton & Williams until 1998. He heads the three-person company MercExchange, which has licensed patents to about half a dozen companies, including GoTo.com Inc., which MercExchange had sued for infringement. Robertson said Woolston had a meeting with eBay officials in June 2000, about six months before the online auctioneer was launched, at which he offered to sell his patents. Monahan said eBay met once with Woolston and “at no time did MercExchange suggest anything we did infringed their intellectual property.” Monahan said that even before MercExchange made its first contact with eBay seeking to sell a patent the company “had an agreement with their lawyers to sue us.” Cooley Godward partner Jeffrey Randall represented eBay. Randall could not be reached for comment.

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