eBay Loses Patent Suit

Updated from May 27

eBay(EBAY Quote) lost a patent suit and is now on the hook to pay $35 million in damages, according to MercExchange, which filed the suit two years ago.

MercExchange, a privately held company, has accused eBay and its fixed-price subsidiary Half.com of violating three of its patents related to online auction technology, shopping search engines, and a system for creating an electronic marketplace. The suit focused on the third patent.

The penalty of $35 million is a sizeable chunk of change, equivalent to 14% of eBay's profit last year of $249.5 million. But one financial analyst said a bigger concern than the one-time payout is whether eBay will have to make ongoing payments in the future to license MercExchange's patents. Tuesday's jury decision in the U.S. District Court for the Eastern District of Virginia was "a little bit of a surprise" for eBay, said the analyst, who requested anonymity. ...