AT&T Sues eBay and Paypal Over Software Patent

The docket of litigation over software patents was expanded recently when AT&T commenced infringement proceedings against eBay Inc. and its subsidiary PayPal, Inc. over AT&T's US patent no. 5,329,589 issued July 12, 1994. The patent at issue concerns methods and apparatus for mediating transactions where a trusted intermediary securely processes payments over a communications system such as the Internet.   During the mediated transaction, sensitive information, such as a credit card number or bank account number, need not be disclosed directly between the parties to the transaction. PayPal's system allows a person to send to, or request money from, anyone having an e-mail address.   Funds may be sent from a chequing account or charged to a credit card.   The payor and the payee of the funds send and receive e-mail messages that link to a secure site, . AT&T asserts that its earlier offer to license the technology was rebuffed by eBay and PayPal.   It now claims a permanent injunction preventing the defendants from using the patented technology, seeking an accounting of profits and revenues eBay and PayPal gained from its use, and claiming compensatory damages. Other recent court cases involving software patents include opposing parties such as Microsoft Corp. and Eolas Technologies (see E-TIPSâ„¢ Vol 2, No 11, November 6, 2003), Microsoft Corp. and Hyperphrase Technologies, Microsoft Corp. and SPX Corp., Cable & Wireless Internet Services, Inc. and Massachusetts Institute of Technology (see E-TIPSâ„¢ Vol 2, No 10, October 23, 2003). For additional reports on the litigation, see: http://news.com.com/2100-1032_3-5110038.html; and http://www.wired.com/news/business/0,1367,61321,00.html. Summary by: Peter Wang