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eBay Sued by XPRT for Patent Infringement

XPRT Ventures LLC, an intellectual property firm, sued eBay yesterday for patent infringement. The lawsuit was filed in the U.S. District Court of Delaware. XPRT is asking for $3.8 billion in damages because apparently they gave eBay the idea to use PayPal to improve their business.

XPRT is accordingly suing eBay’s acquired companies, including PayPal, Bill Me Later, Shopping.com, and StubHub. XPRT claims that in September of 2001, it advised eBay to buy PayPal because it would reduce costs associated with other types of payments. EBay never followed up with XPRT, but instead months later eBay bought PayPal. These ideas were protected by XPRT’s patents, but eBay disregarded the patents and went ahead with the technological information that would greatly benefit the company. EBay’s decision to use the advice violated the inventors’ confidential material.

“EBay’s familiarity with the confidential information provided by the Inventors allowed eBay to recognize the advantages it would realize by acquiring, modifying and integrating PayPal’s payment platform with eBay’s own e-commerce payment platform,” the lawsuit reads. “EBay also knew or should have known that such modification and combination would violate Inventors’ patent application claims should they issue as patents.”

Later, in April or 2003, eBay filed their own patent applications which were later rejected four times by the U.S. Patent and Trademark Office because the application failed to recognize or cite XPRT’s patents. Eventually, eBay cited XPRT’s patents on their application.

XPRT is claiming that eBay and the other companies knowingly took this information and did not give credit to XPRT where it was deserved. EBay incorporated PayPal into their e-commerce platform, along with other payment features including PayPal Pay Later, PayPal Buyer Credit, PayPal’s Balance Manager Service, and the Checkout payment system. The years of using PayPal payment methods without crediting XPRT amounts to $3.8 billion in damages.

XPRT wants to charge eBay on nine counts- six for infringement, one for unjust enrichment, one for misappropriation of trade secrets, and one for conversion. The six XPRT patents that were supposedly infringed are:

  1. 7,483,856 — System and method for effecting payment for an electronic auction commerce transaction
  2. 7,567,937 —¬†System and method for automatically effecting payment for a user of an electronic auction system
  3. 7,627,528 — System and method for effecting a real-time payment for an item won on an electronic auction
  4. 7,610,244 — System and method for effecting payment for an item offered for an electronic auction sale
  5. 7,599,881 — System and method for offering an incentive to a user of an electronic commerce web site
  6. 7,512,563 — System and method to automate payment for a commerce transaction

EBay refused to comment on the law suit.

[Photo courtesy of goto.]