eBay is the target of a $3.8 billion intellectual-property suit. XPRT Ventures filed suit against the online auctioneer in a Delaware U.S. District Court. The suit also names eBay subsidiaries PayPal and Bill Me Later, along with Shopping.com and StubHub.
XPRT claims to hold significant patents covering e-commerce payment systems and methods. The lawsuit alleges trade-secret theft and patent infringement involving six XPRT patents. XPRT asserts eBay stole the idea and method of payment used in PayPal and similar electronic-payment systems.
eBay couldn’t be immediately reached for comment, but has said it will defend itself vigorously.
“When you have big numbers like this, typically the plaintiff is looking for a settlement amount that is substantially less. But still, it would undoubtedly be something in the billion-dollar range,” said Rob Enderle, principal analyst at the Enderle Group. “They are alleging extreme improper behavior, drifting well over into fraud. If this is true, the likelihood that a court would throw the book at eBay is pretty high. Courts have virtually no sense of humor when it comes to fraud. But we haven’t heard eBay’s side of the story.”
The Case Against eBay
The complaint filed by Kelley Drye and Warren, the law firm representing XPRT, alleges that the investors listed on XPRT’s patents confidentially shared the patent applications with eBay, along with ideas on how to implement the concepts described in the patents. XPRT alleges that eBay then incorporated those concepts into PayPal, infringing on confidential and proprietary material.
“XPRT claims that eBay’s upper management knew, or should have known, that the unauthorized use of inventors’ confidential and proprietary material ran the risk of patent infringement if XPRT’s patent applications were issued as patents,” the law firm said.
According to the complaint, although eBay was aware of the confidential and proprietary nature of the inventors’ disclosures, it filed a…