eBay, the biggest auction site, and MercExchange have settled their patent dispute that ignited back in 2001.

Seven years ago MercExchange, a Virginia-based intellectual property company, has filed a lawsuit against eBay, claiming that the site's popular "Buy It Now" feature was infringing its patent.

Two years later, a federal judge decided that eBay is guilty and ordered it to pay $25 million in damages. The auction site contested the decision, but the appeal court upheld the verdict and imposed also an injunction.

However, eBay went all the way to the US Supreme Court, which ruled that MercExchange was not automatically entitled to an injunction against eBay, but it can request a monetary settlement.

The US Supreme Court sent back the case to a lower court to decide how much should pay eBay as damages. Last year in December, the U.S. District Court in Norfolk, Va., ruled that eBay should pay to MercExchange $30 million.

But yesterday eBay said it has agreed to a settlement with MercExchange to dismiss all claims and appeals stemming from the patent lawsuit.

Also the auction site said it will some additional related technology and inventions and a license to another search-related patent portfolio that was not asserted in the lawsuit.

"We're pleased to have been able to reach a settlement with MercExchange," said Mike Jacobson, eBay Senior Vice President and General Counsel. "In addition to resolving the litigation, this settlement gives us access to additional intellectual property that will help improve and further secure our marketplaces."

Further terms of the settlement are confidential and were not disclosed. eBay does not expect the settlement to affect its 2007 results or its 2008 financial guidance issued in conjunction with its fourth quarter earnings release announced on January 23, 2008.