EBay’s “Buy It Now” feature might be closed down because of Patent Infringement

March 11th, 2006

EBay was found guilty by the federal government against a patent infringement dispute with MercExchange LLC over the “Buy It Now” feature.  The “Buy It Now” feature lets a person complete an auction instantly at a fixed price instead of waiting of an auction to complete at a later time.

It is estimated that about one-third of eBay sales are completed with the “Buy It Now” feature.  It is often a selling point to items that are new and a person wants a fast turn around.

It is still up in the air whether the injunction will be enforced.  The high court will hear the arguments in the next couple of weeks.

EBay argued that they shouldn’t be forced to shut down these features as MercExchange LLC has not been using these feature since 2000.  MercExchange says it does practice using these features by licensing it to other companies which are Ubid.com and Autotrader.com.

At this point eBay is still able to use the “Buy It Now” feature,  but may either be forced to pay licensing or to remove the feature altogether, depending on the ruling by the courts later this month.

This could be detrimental to eBay as it would lose a lot of sales if the buyers have to wait for auctions to close.  They could possibly add in more of the storefront sales in an effort to address instant buyers.  It would be likely the eBay store fees would go up if the “Buy It Now” is removed because eBay will probably try to pass the fees over to the storefront.

I don’t think it will affect eBay except in the short term.  It will end up with rate changes that could slow business for eBay as the Storefront sellers are more thrift minded sellers.  It could help to shift the business to Craigslist, GoogleBase, Overstock.com, or Yahoo Auctions.