eBay Faces Bitter Patent Trial

Online auction house eBay, one of the last remaining winners from the dot-com bubble, is going on trial over the very foundation of its success: the programs and procedures that run the popular cyber-bazaar.

Lawyers were set to make opening statements Thursday in the patent trial brought by Great Falls, Va.-based MercExchange LLC, which claims eBay stole the ideas of its founder, attorney Thomas G. Woolston.

The presiding judge said the case was one of the most contentious he had seen in nearly 20 years on the bench. One patent-law experts said damages in the case could surpass $100 million.

MercExchange filed suit in federal court in September 2001 accusing eBay of using Woolston's patented ideas to operate its online auction house, without his permission and without paying him.

EBay has countered that the company's procedures don't infringe Woolston's patents, and that those patents are unenforceable anyway because other people had proposed similar systems and methods before Woolston filed his applications.

Now, the two sides will be presenting their arguments to a jury, selected Wednesday. The trial is expected to last about three weeks.

Federal district Judge Jerome B. Friedman warned the attorneys that "it's going to be your responsibility to make sure this is something the average person can understand."

If the jury finds in favor of Woolston, it will have to decide how much money MercExchange lost. That will require listening to more testimony from both sides.

Neil Smith, a San Francisco attorney specializing in intellectual property law, noted that because MercExchange is claiming that eBay "willfully" infringed its patents, the court can order eBay to pay as much as three times any amount the jury determines.

With a jury award likely to total at least in the "tens of millions of dollars," Smith said, eBay's total liability could amount to more than $100 million.

Driven by the surging popularity of online auctions at home and abroad, San Jose-based eBay Inc. Tuesday posted a first-quarter profit of $104.2 million, more than double the amount it earned in the same period last year.