Actually they will not do anything with the negative response as I had a similar incident when a buyer said I failed to report of additional taxes although It was written in my listing!
They called it the buyer`s experience...
But I guess the guy is right about the case thing
This one is the worst.
" if the buyer is lying and YOU ( ebay) can see that, he's still allowed to leave the feedback? "
" yes, it's the buyers experience"
" but he's lying.... YOu admited that just now"
" buyers experience. You can leave a followup feedback."
"thanks..."
The complete step-by-step guide to get back to selling today!
Don't let the automatic process complete just call and have a rep look at it and they will 100% of the time close it. Maybe not 100% if you get a a##hole but seriously, don't let it go through the automatic process.
So I've escalated it...
Few days on hold and no reaction from eBay
Sent a message to buyer saying : I just want to remind, you bought non working screen , are you sure u wanna blame me it's not working
On a next day buyer cancelled dispute without eBay help
Is this transaction seen as defect on eBay side?
Yes it's still a defect. You didn't win the case. The buyer cancelled the case. You should have called and got the case cancelled based on the information that was given. Still a chance, but nothing is automatic. YOU have to do it yourself.
Re: Silly buyer blames for item NOT WORKING 
