The two companies signed an agreement Thursday to end their legal dispute. As part of the settlement, Bidder's Edge paid eBay an undisclosed amount of money and will drop its appeal of an injunction that barred it from using an automated search system to comb eBay's listings.
"We consider this a major victory for eBay and for all entrepreneurs," eBay spokesman Kevin Pursglove said.
The settlement comes a week after Burlington, Mass.-based Bidder's Edge shut down its Web site, citing market conditions. Despite the site's closure, the company has continued operations and is exploring other business opportunities.
"We felt at this point it didn't make a whole lot of sense to go through the legal process when we weren't in the business anymore," said James Carney, chief executive of Bidder's Edge. "It worked out for each party. Everybody got something out of it."
eBay sued Bidder's Edge in U.S. District Court in December 1999, charging that a search service offered by Bidder's Edge infringed on its intellectual property and slowed service for eBay members. Last May, the judge in the case issued a preliminary injunction against Bidder's Edge, barring it from combing eBay for auction listings with its search system.
Bidder's Edge appealed the ruling but also modified its search system to comply with it.
As part of the settlement agreement, Bidder's Edge agreed to abide by the injunction and to drop a counter-suit against eBay in which it accused the San Jose, Calif.-based company of monopolistic practices. For its part, eBay has dropped its original suit against Bidder's Edge.
Several auction service companies such as GoTo Auctions have licensed the right to search eBay's listings. But others, such as AuctionWatch.com, have refused and continue to search eBay without the auction giant's permission. eBay is "continuing to talk" with AuctionWatch about its searches, Pursglove said.