Inventors of Online Payment Technology Sue eBay, PayPal, others for $3.8 Billion

XPRT Ventures LLC last week sued eBay Inc. and its companies PayPal Inc., Bill Me Later Inc., Shopping.com Inc. and StubHub Inc. for some $3.8 billion, charging the auction web site with stealing its ideas and methods to process online payments and illegally profiting from using its technology.

The lawsuit was filed in U.S. District Court for the District of Delaware by attorneys at Kelley Drye & Warren LLP on XPRT's behalf, alleging theft of trade secrets and infringement on six XPRT patents. Kelley Drye maintains a privacy and information security practice.

In the complaint, XPRT accused eBay of using ideas, information and implementation formats that XPRT shared with eBay prior to submitting its patent applications and incorporated the material into its own payment platform. XPRT contends that information was confidential and proprietary.

The alleged patent and trade secret violations took place on former eBay chief executive and current California gubernatorial candidate Meg Whitman's watch.

According to the complaint, eBay filed its own application for a U.S. patent, using some of the same material that XPRT used in its own patent application.

The U.S. Patent & Trademark Office subsequently granted six patents to XPRT and rejected four eBay patent applications.

The complaint further charges that eBay altered the date on a confidentiality agreement between the two parties to make it appear as though its obligation to maintain the privacy of XPRT's material came into effect on the day eBay filed its patent application not when the two companies first met.

XPRT said that eBay's process for customers to complete a purchase is based on XPRT's technology, which the auctioneer later brought to PayPal, Bill Me Later, Shopping and StubHub.

In an article on the lawsuit initially posted in The AmLaw Litigation Daily and blogged about at the web site law.com, Alison Frankel wrote that XPRT's lawyers at Kelley Drye said that XPRT tried unsuccessfully to work out a deal with eBay.

Frankel wrote that eBay said it is "reviewing the complaint filed today. We believe it is without merit and intend to defend ourselves vigorously."


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