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EBay Targeted In USD3.8bn Patent Suit

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

15 July 2010


XPRT Ventures LLC, which holds patents covering e-commerce payment systems and methods, has filed a lawsuit against eBay and four of its subsidiaries for alleged patent infringement.

The lawsuit, filed in the United States District Court for the District of Delaware, asserts trade secret theft and patent infringement claims with respect to six XPRT patents. EBay's subsidiaries PayPal, Bill Me Later, Shopping.com, and StubHub were also named in the lawsuit, which seeks monetary damages in excess of USD3.8bn.

XPRT asserts eBay unfairly stole the idea and method of payment used in eBay's PayPal and similar electronic payment systems. The complaint goes on to allege that the inventors listed on XPRT's patents shared their patent applications and ideas with eBay in confidence, but that the online auction firm incorporated these concepts and ideas into its auction payment process without authorization.

According to the complaint, although eBay knew of the confidential and proprietary nature of the inventors' disclosures, eBay nevertheless filed a U.S. patent application, using the same attorney who had reviewed XPRT's disclosures, which incorporated numerous disclosures set forth in XPRT's patent applications. However, eBay did not disclose XPRT's patent applications to the U.S. Patent and Trademark Office, until a search report issued for eBay's corresponding foreign patent application cited one of XPRT's published patent applications as relevant prior art.

EBay's U.S. patent application has been rejected four times based on the earliest filed XPRT patent application, which was filed more than two years before eBay's patent application was filed, said the plaintiff's legal representatives Kelley, Drye & Warren.

"As a result of eBay's duty of candor before the USPTO to prosecute only claims believed by it to be patentable, XPRT asserts that eBay has admitted the patentability of the subject matter of numerous claims contained in XPRT's patent applications," the law firm stated.

The complaint alleges that a confidentiality agreement, provided by eBay and signed by XPRT's inventors, was later unilaterally altered in respect of its effective date by eBay's senior patent counsel to make it appear as if eBay's obligation to keep XPRT's information confidential only arose on the date eBay's patent application was filed.

XPRT claims that eBay used confidential and proprietary information to modify and incorporate PayPal into its e-commerce platform and to roll out several features incorporated into eBay's payment systems.

EBay has not yet commented on the lawsuit.

TAGS: court | patents | commerce | law | intellectual property | enforcement | internet | e-commerce | United States

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