Patent Predicament: eBay Sued for Patent Infringement

Today another lawsuit has been filed against a tech giant.  eBay is being sued for patent infringement regarding the technology behind the eBay owned properties, PayPal, Shopping.com, Bill Me Later, and StubHub.com.  Who knew eBay acquired all four companies?  XPRT Ventures LLC is alleging eBay acquired all four companies with the intention of infringing on XPRT’s patent for “systems and methods affecting payments for electronic auction transactions and e-commerce transactions.” XPRT  is demanding 3.8 billion dollars based on eBay’s past, present, and future earnings as a result of the alleged infringed technology.

Apparently, eBay and XPRT go way back.  According to the complaint, in 2001, XPRT filed two patent applications for “systems and methods affecting payments for electronic auction transactions and e-commerce transactions.”  XPRT allegedly sent eBay a letter regarding the patents.   Subsequently XPRT and eBay met regarding the possibility of eBay using the technology for its online auction and e-commerce business.

The two parties signed a Non Disclosure Agreement (NDA) and eBay agreed to keep the technology confidential while eBay considered the possibility of entering into a business relationship with XPRT. XPRT alleges while eBay was reviewing their patents, they acquired Paypal, a company that essentially provided similar technology.  Specifically XPRT alleges eBay “modified and integrated” Paypal’s technology into the eBay platform and this modification and integration infringed their patent.

XPRT further alleges eBay attempted to file a patent application with the United States Patent and Trademark Office (USPTO) for the claims XPRT had already filed and received patent registration. The USPTO rejected eBay’s patent applications based on XPRT’s Prior Art. In regards to patents,  Prior Art means any information made publicly available in any form prior to the date a party claims to the originality of a patent.  XPRT’s Prior Art was its filed patent applications.

XPRT further alleges they disclosed to eBay during the NDA period, technology featuring an electronic loan funds feature, the same technology as the eBay acquired company, Bill Me Later.  I am assuming XPRT included StubHub.com and Shopping.com based on similar similar theories.

To better understand XPRT’s claims for patent infringement, the following are some basic concepts regarding patents and patent infringement:

In order for a party to prevail on a patent infringement claim, the party must prove the following:

1. the infringing party’s products or methods must fall within one or more claims of the patent at issue.

2. A patent claim is the part of a patent or patent application that defines the scope of protection granted by the patent. For example, XPRT’s patent claims at issue are “systems and methods affecting payments for electronic auction transactions and e-commerce transactions”

3.  The infringed parties claim must “read on” the infringing technology.  This means all elements of the claim must be present in the infringing party’s technology to infringe the claim.

Considering eBay and XPRT did sign a NDA regarding the technology at issue and had several negotiations over a period of years concerning the technology, there may be some truth to their claims.  Also the USPTO’s rejection of eBay’s original patent applications due to XPRT prior issued patents lends additional evidence to possible infringement.

At present, eBay has not commented on this lawsuit.

About the Author
Latoicha Givens is the founder and a member of the firm Phillips Givens, LLC. Ms. Givens practice includes represention of start-ups, small, and mid-sized businesses in intellectual property matters, specficially, trademarks, copyrights, and licensing issues. She is the author of IPLAW101.com, a blog covering Intellectual Property issues specifically trademark law - trademark registration and infringement; Domain Name Disputes: Cybersquatting; Licensing and Intellectual Property issues in New Media.
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