update A federal judge has sided with eBay, issuing a preliminary injunction barring Bidder's Edge from using an automated system to search eBay's site for auction information.
The injunction, granted late yesterday by U.S. District Court Judge Ronald Whyte, goes into effect June 8.
"It is undisputed that eBay's server and its capacity are personal property, and that Bidder's Edge's searches use a portion of that property," Whyte wrote in his order. "Even if its searches use only a small amount of eBay's computer system capacity, Bidder's Edge has nonetheless deprived eBay of the ability to use that portion of its personal property for its own purposes. The law recognizes no such right to use another's personal property."
eBay sued Bidder's Edge in December, alleging that the Burlington, Mass.-based company had illegally trespassed on its site, violated its copyright and trademarks and slowed its service for eBay users.
Bidder's Edge plans to appeal the injunction immediately, said its president and chief executive James Carney. Despite the injunction, Carney said the company still expects to eventually win the dispute.
"From our standpoint, this decision was expected," he said. Bidder's Edge has also denied that it had damaged eBay's servers and said it schedules searches for off-peak hours.
Whyte denied a broader injunction based on eBay's copyright and trademark claims. He also left open the possibility that Bidder's Edge could continue to display links to eBay's auctions on its site.
"Nothing in this order precludes Bidder's Edge from utilizing information obtained from eBay's site other than by automated...Web crawler or similar device," he wrote.
Jay Monahan, an attorney for eBay, said the ruling means eBay has the right to stop "trespassers" from hurting its site. "Obviously, we are very pleased and think it's an important ruling," he said.
Although the lawsuit focuses on the narrow issue of whether an outside site can comb eBay's auctions, both eBay and Bidder's Edge have portrayed the dispute as having far-reaching implications.
eBay has argued that if it is not able to protect its personal and intellectual property, other sites could find their information on the Web at risk also. Bidder's Edge has argued that eBay's attempt to limit it from displaying eBay's publicly accessible auction information could have negative consequences not just for other auction portals, but for Yahoo and other mainstream portals as well.
Meanwhile, the Justice Department has jumped into the fray, opening an antitrust inquiry into eBay's dealings with the online auction portals, including Bidder's Edge.
In his ruling, Whyte scoffed at the broader implications of the lawsuit. "The parties submit a variety of declarations asserting that the Internet will cease to function if (they lose the dispute)," Whyte wrote. "The court suspects that the Internet will not only survive but continue to grow and develop regardless of the outcome of this litigation."
Fundamentally, the lawsuit is about eBay's need to protect its auction information, said Jupiter Communications digital commerce analyst Mike May. eBay's chief advantage over its competitors is its sheer size; on any given day, eBay has several times the number of auctions and merchandise available on its site than can be found on competitors such as Yahoo or Amazon.com.
With access to eBay's listings, auction portals such as Bidder's Edge have the potential to rival to eBay for the auction audience, May said. If an auction portal were to build up enough of an audience, it might lead eBay sellers to move their merchandise to other, less expensive auction houses, since they would be assured that a large audience of buyers would still see their items.
"eBay has everything to lose by opening up its merchandise to bidders that are not at eBay's site," May said. "The end game for Bidder's Edge is to disintermediate each individual auction site."