AT&T files patent suit against eBay ; Online payment method at issue
Posted on: Friday, 21 November 2003, 06:00 CST
AT&T says eBay isn't playing fair.
The Bedminister-based phone company filed a patent infringement lawsuit Thursday in U.S. District Court in Delaware against the Internet auctioneer and its subsidiary PayPal Inc.
AT&T alleges that eBay and PayPal are using a method to process payment information via a third party over the Internet that was developed by a group of AT&T researchers who received a patent on the idea in 1994.
AT&T doesn't want to stop the companies from using the method, said AT&T spokesman Gary Morgenstern. "They should pay for the privilege."
AT&T wants the companies to pay a licensing fee for the right to use the method.
Morgenstern said AT&T met with eBay and PayPal to try to resolve the issue more than a year ago and grant licenses to the companies.
Those talks ended with no agreement.
"We had conversations about it," said eBay spokesman Chris Donlay, "And based on what we know here, we believe the suit is completely meritless and we plan to defend ourselves vigorously."
The AT&T lawsuit contends that its patent covers a payment processing method that uses a third party - or so-called trusted intermediary - that collects sensitive information such as a customer's credit card or bank account number.
A third party enables a customer to purchase something without disclosing sensitive information to an unfamiliar person or company selling a product or service.
The trusted third party informs the person selling the product that, for example, a credit card purchase has been approved.
"AT&T has invested hundreds of millions of dollars every year in research and development, and the company seeks to protect its inventions by licensing its patents to those who use its intellectual property," AT&T said.
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E-mail: mckay@northjersey.com
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