MercExchange, a tiny Virginia-based company that has taken eBay to all levels of the US court system for patent infringement, has won at the District Court level in Virginia.

MercExchange holds patents for e-commerce solutions that involve internet auctions, what it calls "name a price" systems, dynamic pricing models, desktop messaging, as well as streaming and multicasting.

The company sought to license one of its patents to eBay and Half.com as it does with sites AutoTrader.com, channeladvisor, uBid, Overture, and ReturnBuy. But when an agreement was not reached, MercExchange filed patent infringement suits against the two companies, seeking an injunction.

The Patent in question was US Patent 5,845,265, which includes language describing an automated system for selling items online and accepting listings of items for sale electronically from remote participants. Apparently eBay's "BuyItNow" feature infringes upon an idea detailed in that patent.

But the Supreme Court ruled that even after a jury has found a technology to be in violation of a patent, a patentee is not automatically entitled to a permanent injunction, as MercExchange's lawyers attempted to claim. Injunctions are left to be solutions to problems where simple monetary compensation is not enough.

While an injunction at the Supreme Court level failed, the most recent court ruling by Virginia District Court on Tuesday ruled in favor of the smaller company, levying a $30 million fine against eBay.

eBay said in a statement yesterday that it plans to appeal the ruling, but MercExchange may not be able to handle much further litigation. As the Associated Press recently reported, the company has dwindled in size from a staff of over 40, to a staff of just three.