XPRT Sues eBay For $3.8 Billion - InformationWeek

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XPRT Sues eBay For $3.8 Billion

The patent-infringement lawsuit claims eBay "unfairly stole the idea and method of payment" used in the auction site's PayPay service.

XPRT Ventures, which holds a number of patents covering online payment technology, has filed a $3.8 billion patent-infringement lawsuit against eBay and several of its subsidiaries.

The suit filed Tuesday in U.S. District Court in Delaware claims eBay "unfairly stole the idea and method of payment" used in the auction site's PayPay service, as well as other similar electronic payment systems used by eBay and its subsidiaries, XPRT says. The suit accuses the defendants of stealing trade secrets and infringing on six XPRT patents.

XPRT is seeking a total of $3.8 billion in damages from eBay and its subsidiaries, including PayPal, Bill Me Later, Shopping.com and StubHub. EBay did not respond to a request for comment.

According to the complaint, the inventors listed on XPRT's patents shared the details of their patent-pending technology with eBay in 2001. In addition, the inventors discussed ideas on how eBay could shave costs by adding its own payment process.

XPRT claims that eBay's upper management at the time knew or should have known that the information shared was proprietary and the disclosures confidential. Nevertheless, eBay bought PayPal in 2002 and used technology later covered in XPRT patents to modify and incorporate PayPal into eBay's e-commerce platform. In addition, several patented features were later rolled out in PayPal. Those features include PayPal Pay Later, Buyer Credit, Balance Manager Service and Checkout payment system.

"By misappropriating the confidential and proprietary information contained in the patent applications, defendants wrongfully exerted control of the information in the patent applications in a manner inconsistent with the inventors' and later XPRT's rights in the patent applications and the confidential and proprietary information contained therein," the lawsuit said.

As evidence of its claims, XPRT says the U.S. Patent and Trademark Office has rejected four times an eBay patent application related to its e-commerce platform on the grounds that the technology is already covered in XPRT patents.

PayPal has been an important revenue driver for eBay. In January, the auction site reported that fourth-quarter income nearly quadrupled on the success of its PayPal operations and spin-off of the Skype Internet telephony service.

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