E-Bay Sued By AT&T Over Payment System

by Glen Shapiro, LawAndTax-News.com, New York

24 November 2003

It emerged last week that telecommunications firm, AT&T has filed a patent infringement suit against eBay and its online payment unit, PayPal over their secure payment system.

According to the suit, filed in Delaware federal court on Thursday, AT&T informed the firms last year that they were infringing on its patent, which was granted in 1994 and covers a system whereby an intermediary processes transactions over a communications medium such as the internet.

In this way, users of the payment system are not obliged to disclose sensitive information such as bank details or credit card numbers directly to vendors.

According to AT&T, it attempted to license the technology to eBay and PayPal, but to no avail.

Claiming that the auction site's use of the patented technology has damaged AT&T's revenues, as it has not been able to sell the system to other prospective users, the firm has called for a permanent injunction preventing eBay and PayPal from employing the technology, and has asked for the profits gained by eBay as a result of its use, in addition to compensatory damages.

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