eBay served with $3.8 billion patent suit

The plaintiff in the suit, XPRT Ventures, claims that eBay filched trade secrets from XPRT patent applications that it then worked into PayPal technology.

Caroline McCarthy Former Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
Caroline McCarthy

A company called XPRT Ventures says transaction system PayPal knowingly incorporated XPRT's e-commerce technology, for which it had filed for U.S. patents, into its own patent applications back in 2003--and has served parent company eBay with a $3.8 billion lawsuit.

According to the suit, which was filed Tuesday in a Delaware federal district court, technology that was built into PayPal's patent had previously been shared with PayPal confidentially by representatives from XPRT and is contained in a total of six XPRT patents. eBay, the complaint alleges, incorporated those details into an April 2003 patent called "Method and System to Automate Payment for a Commerce Transaction."

"The inventors listed on XPRT's patents shared their patent applications and ideas on how to implement such concepts taught therein, with eBay in confidence," a release from Kelley Drye and Warren, the law firm representing the plaintiffs, explained. "eBay incorporated such inventive concepts and ideas into its auction payment process during current California gubernatorial candidate Meg Whitman's tenure as eBay's CEO. eBay's unauthorized incorporation was a misuse of inventors' confidential and proprietary material."

PayPal, as well as other eBay subsidiaries BillMeLater, Shopping.com, and StubHub, were also named as defendants in the lawsuit.

"We are reviewing the complaint filed today," an eBay representative told CNET via e-mail. "We believe it is without merit, and intend to defend ourselves vigorously."

eBay acquired PayPal in a landmark 2002 buy that totaled $1.5 billion.