eBay sued for $3.8 Billion - - Patent Troll or David v. Goliath?
Is it David v. Goliath or a patent troll case? Connecticut based XPRT Ventures, LLC has filed a lawsuit in the U.S. District Court in Delaware (download lawsuit here) against eBay for $3.8 billion dollars over the technology for automating and securing online payment portals. The suit was also filed against eBay's PayPal, Bill Me Later, Shopping.com, and StubHub.
In the suit, XPRT alleges that PayPal and others have used its systems and methods for electronic auction and e-commerce transactions subject to XPRT's six U.S. patents since at least 2002. XPRT also alleges that eBay received confidential information in 2001 from the inventors and misappropriated information from patent applications assigned to XPRT. XPRT alleges a loss to date of $600 million with expected future losses of $3.2 billion.
The suit is for willful patent infringement, but at its heart is XPRT's allegation that eBay stole XPRT's trade secrets obtained from patent applications to use in eBay's own patent applications and for use by eBay in multiple platforms for PayPal and others. The complaint states that XPRT passed on confidential information related to its patents to eBay in 2001 with the expectation of compensation should eBay be interested in the technology. The complaint alleges that the confidential information included how eBay could benefit from acquiring PayPal's payment platform. Instead, eBay allegedly used the information provided in support of its own patent applications and online uses for PayPal and others.
The suit has been summarized and covered by various online media with some support and others criticizing the suit. Read here for the Reuters report on eBay suit and PCWorld's story. Another good summary is the post today from Rajeev Saxena of Trends Updates. The post includes the following statement from XPRT's Connecticut based counsel, Steven Moore:
This involves a trade secret theft, along with sheer patent infringement. It is bad enough to take someone's technology, but it is a bit much to use it in your own patent application.
Attorney Moore's firm also issued a press release that states, in part:
In a nutshell, XPRT asserts eBay unfairly stole the idea and method of payment used in eBay's PayPal and similar electronic payment systems.
Techdirt, a technology blog, came out swinging and criticized the suit as "another patent lawsuit against a big company for doing something obvious, filed by a company that appears to exist solely for the purpose of suing a company that actually does stuff." Mike also includes in his post some additional details about the history of XPRT's trail of patent rejections. His take is basically that the case is a patent troll stick up suit. For a good and balanced definition of "troll patent" or "patent troll" read this post form PatentlyO, the nations leading patent law blog.
Erik Sherman, a freelance writer, had a somewhat different take in his blog post. After a providing a detailed summary of his own investigation and fact finding, Erik wrote that "this is not a simple case of a troll finding an obscure patent that could be stretched to cover an intended target." He also focused on another case where eBay was alleged to have engaged in similar unethical behavior and the complications potentially created for Meg Whitman (eBay CEO at the time) currently running for California governor.
Thus far, eBay only issued a short statement denying that there is any merit to the suit. What's your take, Patent Trolling or David v. Goliath?
