eBay ensnared in intellectual property dispute

Bob Porterfield The Associated Press
Tuesday October 01, 2002

SAN JOSE – On a typically sultry summer afternoon in the nation’s capital, eBay attorney Andrew Kumamoto walked into a conference room to talk patents with a Virginia inventor. 

That discussion, held to gauge eBay’s interest in acquiring patents held by Tom Woolston and his company, MercExchange, has led to a David-and-Goliath confrontation that some consider nothing more than an attempt to pick eBay’s pocket. 

But if Woolston wins in court, the inventor just might change how the online auctioneer does business. 

Woolston believes the patents cover nearly every aspect of eBay’s operations, including the very procedure millions of people use to buy and sell everything from stuffed bears to aircraft. The technology has quickly made eBay, on paper at least, one of the Internet’s great success stories. 

EBay believes Woolston revised his initial claim after seeing eBay’s success, so that his patent would cover what eBay was doing. 

Woolston denies any such manipulation. An electrical engineer with years of experience in the military and the CIA, he says he came up with his online auction concept while a law student, long before Pierre Omidyar, eBay’s founder, began seriously thinking about auctions and community. 

“I was there with the technical know-how and ability to see it first,” he says bluntly. “We won’t be bullied.” 

The legal drama may ultimately play out before a federal jury in Virginia, but the pretrial script already includes bitter arguments over intellectual property law, with millions of dollars at risk for eBay. 

The growth of online commerce has spawned dozens of lawsuits over intellectual property. One highly publicized case involved online bookseller amazon.com, which was granted a patent for the process that allows customers to complete purchases with a single mouse-click.