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eBay Sued for $3.8 Billion for Alleged Patent Infringement
Online auction giant eBay Inc. was hit with a $3.8 billion patent-infringement lawsuit last month.
XPRT Ventures LLC, which holds patents covering e-commerce payments and methods, filed suit in U.S. District Court for the District of Delaware against eBay and several subsidiaries, including PayPal Inc. and StubHub Inc.
The suit alleges infringement of six XPRT patents covering e-commerce payment systems and that eBay misappropriated information provided in confidence.
“eBay has treated them unfairly,” Delphine Knight Brown, an attorney with Kelley Drye & Warren, who represents the plaintiff, says. “They stole their ideas and misappropriated them for their own benefit despite a confidentiality agreement.”
eBay representatives did not respond to requests for comment.
The basis for the infringement claims dates to early 2001, when XPRT inventors filed patent applications covering e-commerce transactions and online-auction payment methods. The patents were granted in 2009.
In autumn 2001, the inventors informed eBay's associate general counsel for intellectual property of the applications, and offered a chance to review them in confidence before they were publicly available, according to the lawsuit.
The inventors believed their systems would improve eBay's existing payment system and hoped to enter a business agreement. An oral agreement of confidentiality was made with an outside attorney representing eBay, and the inventors provided the patent applications. Both parties later signed a written confidentiality agreement, although they disagree over the effective date.
Less than a year after the plaintiffs first approached eBay, the company announced that it was acquiring online-payment company PayPal. The lawsuit claims that the confidential review of XPRT's patent applications tipped eBay off to the potential advantages of integrating PayPal's payment system into its existing one.
Former eBay Chief Executive Officer Meg Whitman (who is running for governor of California) “as well as others at eBay knew, or should have known, that the modification and incorporation of PayPal to the eBay auction process was a misuse of the inventor's confidential material,” the suit reads.
eBay filed its own patent application in April 2003, covering the same concepts covered by the plaintiff's applications, the complaint says.
eBay's patent application has been rejected four times because of XPRT's existing application, says Steven Moore, another Kelley Drye attorney representing the plaintiff.
Despite warnings from the inventors, eBay continued to roll out products based on systems XPRT developed, according to the suit. Those initiatives include the “eBay Bucks” rewards system in 2009, and a PayPal application that allows users to complete transactions from their mobile phones.
In addition to six claims of patent infringement, the suit includes one count each of misappropriation of trade secrets, unjust enrichment and conversion.
Karen Sloan is a reporter for our ALM affiliate, New Jersey Law Journal.
Online auction giant
XPRT Ventures LLC, which holds patents covering e-commerce payments and methods, filed suit in U.S. District Court for the District of Delaware against eBay and several subsidiaries, including
The suit alleges infringement of six XPRT patents covering e-commerce payment systems and that eBay misappropriated information provided in confidence.
“eBay has treated them unfairly,” Delphine Knight Brown, an attorney with
eBay representatives did not respond to requests for comment.
The basis for the infringement claims dates to early 2001, when XPRT inventors filed patent applications covering e-commerce transactions and online-auction payment methods. The patents were granted in 2009.
In autumn 2001, the inventors informed eBay's associate general counsel for intellectual property of the applications, and offered a chance to review them in confidence before they were publicly available, according to the lawsuit.
The inventors believed their systems would improve eBay's existing payment system and hoped to enter a business agreement. An oral agreement of confidentiality was made with an outside attorney representing eBay, and the inventors provided the patent applications. Both parties later signed a written confidentiality agreement, although they disagree over the effective date.
Less than a year after the plaintiffs first approached eBay, the company announced that it was acquiring online-payment company PayPal. The lawsuit claims that the confidential review of XPRT's patent applications tipped eBay off to the potential advantages of integrating PayPal's payment system into its existing one.
Former eBay Chief Executive Officer Meg Whitman (who is running for governor of California) “as well as others at eBay knew, or should have known, that the modification and incorporation of PayPal to the eBay auction process was a misuse of the inventor's confidential material,” the suit reads.
eBay filed its own patent application in April 2003, covering the same concepts covered by the plaintiff's applications, the complaint says.
eBay's patent application has been rejected four times because of XPRT's existing application, says Steven Moore, another
Despite warnings from the inventors, eBay continued to roll out products based on systems XPRT developed, according to the suit. Those initiatives include the “eBay Bucks” rewards system in 2009, and a PayPal application that allows users to complete transactions from their mobile phones.
In addition to six claims of patent infringement, the suit includes one count each of misappropriation of trade secrets, unjust enrichment and conversion.
Karen Sloan is a reporter for our ALM affiliate, New Jersey Law Journal.
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