SAN FRANCISCO Stock unfazed by eBay verdict

EBay stock hit a 52-week high Wednesday.
SAN FRANCISCO (AP) -- A $35-million patent infringement verdict against eBay Inc. hasn't dented its soaring stock price, but the case might force the online auction giant to tweak its sales format -- or pay millions of dollars in royalties.
A federal jury in Norfolk, Va., ruled that eBay's model for selling some merchandise violated a patent filed on behalf of Great Falls, Va.-based MercExchange. Most analysts and patent experts were expecting San Jose-based eBay, which refused to settle out of court, to win or get the case dismissed.
But the surprise loss Tuesday didn't sap enthusiasm for eBay, one of Silicon Valley's biggest success stories.
EBay stock hit a 52-week high Wednesday, reaching $103.48 on the Nasdaq Stock Market. It dipped in the afternoon but closed at $101.18, up 49 percent from the beginning of the year. The company's price-to-earnings ratio -- a critical measure of Wall Street's bullishness for upcoming quarters -- was 103. By contrast, the ratio for Microsoft Corp. was 28.
Investors have largely disregarded the Virginia case because it does not involve eBay's tremendously popular auctions and is not expected to affect the millions of competing bids that eBay processes each day. Nor will it stall PayPal, a bill payment division that has generated hundreds of millions of dollars for eBay.
Instead, the case hinges on the way eBay sells fixed-price merchandise, which accounts for less than one-third of eBay's total sales. In fact, some analysts say the case may end up hanging over as little as 5 percent of eBay's sales, depending on how a judge rules during post-verdict hearings over the next three weeks.
Jay Monahan, eBay's deputy general counsel, said eBay will ask the judge to either overturn the jury's 20-page verdict or reduce the damages. EBay may appeal if those measures don't work, Monahan said.
Not so quick
Experts in technology patents weren't so quick to dismiss the case. They say the verdict could force eBay to tweak its fixed-price sales format so it doesn't duplicate the system patented by Tom Woolston of MercExchange.
MercExchange has shrunk to three employees, and the company can barely pay attorneys' fees. EBay, which listed nearly 220 million items last quarter, is predicting it will earn more than $2 billion this year.
The changes could add extra steps and complexity to eBay's no-bid sales, including the popular "Buy It Now" feature. The feature offers a single price -- typically far above the opening bid -- so people who dislike haggling can simply click and buy.
E-commerce companies are willing to get into major legal confrontations over their sales formats because online consumers want the simplest possible shopping experience, said San Francisco patent attorney Neil Smith.
"On the Internet, seconds matter," Smith said Wednesday. "But there are ways to facilitate the purchase of fixed-price merchandise. In any case, there are often deals made, and eBay can certainly afford to pay royalties."