RSS
eBay Sued For Patent Infringement... With Added Conspiracy Theory
from the don't-miss-it dept
Another day, 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. This time it's a "company" XPRT Ventures who has sued eBay and is demanding a mere $3.8 billion for its troubles. $3.8 billion dollars for doing nothing seems like a pretty good deal. Unfortunately, the news coverage seems lacking. It doesn't say what patents the lawsuit involves or what those patents cover, so we had to do some digging ourselves. The law firm that filed lawsuit issued a rather one-sided press release that also alleges that eBay "unilaterally altered" a confidentiality agreement between XPRT and eBay -- which makes the case a bit more interesting. The press release still doesn't name the patents, but it does link to the ridiculously long (209 pages) complaint (warning: ridiculously large pdf), which you can also read below:
From here we find out that the "inventors" (and I use the term loosely) came up with some rather basic enhancements for online payments, and apparently pitched them to eBay way back in 2001. A law firm claiming to represent eBay apparently asked to see the patent applications, and that was about the end of the discussions. XPRT, however, claims that eBay then took those ideas and decided to buy PayPal to implement them. That eBay bought Paypal because most people on eBay were using PayPal to complete transactions and eBay wanted a cut of those transactions isn't mentioned. Instead, the complaint suggests that eBay bought PayPal specifically to try to replicate what was in XPRT's patent applications:
As for the whole conspiracy stuff about eBay "unilaterally altering" the date on the agreement, it turns out there's not much there there. Basically, eBay and the inventors negotiated over an NDA to share some information, with the initial proposed NDA having a date of March __, 2002. That was, clearly, a placeholder, found in just about every contact negotiation you'll ever see. When eBay actually signed the NDA it replaced the placeholder with the date of the signature, April 30, 2003. That's how contracts work.
XPRT, however, suggests that eBay's own (equally questionable) patents on its own payment system were filed just before eBay signed this document, and that eBay failed to note the XPRT patent applications, despite knowing about them, as prior art. To make it even more fun, the complaint suggests that eBay effectively admitted that XPRT's technologies are patentable, because it tried to cover the same inventions with the claims in its own patent filings. Basically, this is a sneaky way to (try to) cut off a claim that XPRT's patents are invalid.
Anyway, the key patent in the battle is the following, which, while it was filed back in 2001, didn't actually issue until 2009. If you look through the history of this particular patent, you find a trail of rejection. The USPTO did a non-final rejection, then a final rejection of the patent in 2004 and 2005. The inventors appealed (and twice had problems of filing a "defective appeal brief"). The appeal also rejected the patent and sided with the examiner. The inventors then asked to have the patent reconsidered, and that was rejected. Then, they asked for the patent to be examined again, and, yet again, the USPTO rejected the patent -- with both a non-final and final rejection. Finally, after all those rejections, the inventors amended the patent some more and finally got it through in 2009. In other words, whatever they showed eBay way back in 2001 was not actually patentable, and what was patented in 2009 was quite different.
7,483,856: System and method for effecting payment for an electronic auction commerce commerce transaction
If you look at the other patents, they appear to be continuation patents on that patent, the common trick of updating an old patent application to make sure it covers what others are actually doing in the market, even if such things weren't really what the initial patent was intended to cover.
Oh, and finally, why are these guys demanding $3.8 billion for a basic idea that they failed to implement themselves? Well, they appear to be claiming a 6% royalty on all of PayPal's revenues, and then make a bunch of assumptions about how much PayPal is likely to make between now and 2024 when the patents will expire. In other words, it's simply making up how much eBay might make and demanding a rather large cut of that.
Upon information and belief, eBay's familiarity with the confidential information provided by the Inventors allowed eBay to recognize the advantages it would realize by acquiring, modifying and integrating PayPal's payment platform with eBay's own e-commerce payment platform. eBay also knew or should have known that such modification and combination would violate Inventors' patent applications claims should they issue as patents.Yeah, ok. This gets even more ridiculous when you realize that XPRT is claiming that it was modifications that PayPal/eBay didn't roll out until 6 or 7 years later that are supposedly infringing.
As for the whole conspiracy stuff about eBay "unilaterally altering" the date on the agreement, it turns out there's not much there there. Basically, eBay and the inventors negotiated over an NDA to share some information, with the initial proposed NDA having a date of March __, 2002. That was, clearly, a placeholder, found in just about every contact negotiation you'll ever see. When eBay actually signed the NDA it replaced the placeholder with the date of the signature, April 30, 2003. That's how contracts work.
XPRT, however, suggests that eBay's own (equally questionable) patents on its own payment system were filed just before eBay signed this document, and that eBay failed to note the XPRT patent applications, despite knowing about them, as prior art. To make it even more fun, the complaint suggests that eBay effectively admitted that XPRT's technologies are patentable, because it tried to cover the same inventions with the claims in its own patent filings. Basically, this is a sneaky way to (try to) cut off a claim that XPRT's patents are invalid.
Anyway, the key patent in the battle is the following, which, while it was filed back in 2001, didn't actually issue until 2009. If you look through the history of this particular patent, you find a trail of rejection. The USPTO did a non-final rejection, then a final rejection of the patent in 2004 and 2005. The inventors appealed (and twice had problems of filing a "defective appeal brief"). The appeal also rejected the patent and sided with the examiner. The inventors then asked to have the patent reconsidered, and that was rejected. Then, they asked for the patent to be examined again, and, yet again, the USPTO rejected the patent -- with both a non-final and final rejection. Finally, after all those rejections, the inventors amended the patent some more and finally got it through in 2009. In other words, whatever they showed eBay way back in 2001 was not actually patentable, and what was patented in 2009 was quite different.
7,483,856: System and method for effecting payment for an electronic auction commerce commerce transaction
If you look at the other patents, they appear to be continuation patents on that patent, the common trick of updating an old patent application to make sure it covers what others are actually doing in the market, even if such things weren't really what the initial patent was intended to cover.
Oh, and finally, why are these guys demanding $3.8 billion for a basic idea that they failed to implement themselves? Well, they appear to be claiming a 6% royalty on all of PayPal's revenues, and then make a bunch of assumptions about how much PayPal is likely to make between now and 2024 when the patents will expire. In other words, it's simply making up how much eBay might make and demanding a rather large cut of that.
I have an app...
Marketing And Monetization Strategies For Free Apps
App Developer Conversations: What Does The iPad Mini Mean For The App Economy?
I have a business...
Why 50,000 Monthly Active Users Weren't Enough To Stop This Company From Pivoting, With Spun Co-Founder Scott Lindenbaum
The Future Of Commerce Will Combine Your Social Network And Mobile Device
I have an idea...
Securing Venture Capital for that Next App Development
5 Things You Should Know About Crowdfunding For Startups
Reader Comments (rss)
(Flattened / Threaded)
[ reply to this | link to this | view in chronology ]
Re:
[ reply to this | link to this | view in chronology ]
"Look at dem yo-yos, that's the way you do it, makin' money on the USPTO!" (With apologies to Mark Knofler.
[ reply to this | link to this | view in chronology ]
Re:
[ reply to this | link to this | view in chronology ]
Re:
Copyright claims from sharks
[ reply to this | link to this | view in chronology ]
Re: Re:
[ reply to this | link to this | view in chronology ]
Re: Re:
[ reply to this | link to this | view in chronology ]
Suit
If you agree to settle now I will agree to a $500.00 paypal transfer to me within 45 days.
[ reply to this | link to this | view in chronology ]
Re: Suit
[ reply to this | link to this | view in chronology ]
My WoW char...
[ reply to this | link to this | view in chronology ]
Re: My WoW char...
Oh come on. How can a 'stache-wearing nazi warlock possibly imitate a 2 foot mage with dwarfism (btw: why doesn't the dwarf race have dwarfism?) Where is your moron in a hurry now?
[ reply to this | link to this | view in chronology ]
issued a rather one-sided press release
what do you find odd that one side would release a 'one-sided' report.
How can they issue anything else? it's their side of the story, it IS one side, and I assume ebay will also issue a press release that is 'one-sided'.
Are you sure Mike, your not just saying words to stir up emotions.
Why say it is one sided, when it is clear it cannot be anything else.
Are you one sided or not when it comes to what you write about, and your supposed to be independent.
They are not independent, they have made a press release that states their case, and you accuse them of being one sided.. !!!..
As for the law fortunatly we have judges who know better than you guys what is right and wrong, and they have specific procedures they must follow, they cannot just make stuff up, and accuse someone of being 'one-sided', as if that is somehow bad in the first place.
Smacks of just saying stuff to get a response, there was no need to make that statement, and it shows that techdirt is equally if not more biased and one-sided..
And it worse for TD as reporting is supposed to be factual and unbiased..
and not one sided. but each side of a case is ofcourse supposed to be one sided, and they are supposed to take sides, and let the courts decide.
Making these "bias" claims is just spin and does nothing to convince most that you are not equally one-eyed, or one-sided.
No balanced reporting here ?
[ reply to this | link to this | view in chronology ]
Re: issued a rather one-sided press release
[ reply to this | link to this | view in chronology ]
Re: issued a rather one-sided press release
[ reply to this | link to this | view in chronology ]
Re: issued a rather one-sided press release
This, however, is a scary thought....
"As for the law, fortunately we have judges who know better than you guys what is right and wrong, and they have specific procedures they must follow, they cannot just make stuff up, and accuse someone of being 'one-sided', as if that is somehow bad in the first place."
If you believe that the law has caught up to technology and that judges are completely competent when it comes to making these decisions, you should think again. Last I checked, judges should know law. Morality (right and wrong) isn't as definite as the law.
[ reply to this | link to this | view in chronology ]
Re: issued a rather one-sided press release
[ reply to this | link to this | view in chronology ]
Re: issued a rather one-sided press release
[ reply to this | link to this | view in chronology ]
Talk about a bullshit patent.
[ reply to this | link to this | view in chronology ]
[ reply to this | link to this | view in chronology ]
Re: issued a rather one-sided press release
Build a bridge and get over it.
It is one sided, wich in this case (as the author later explained) they tried their best to ignore the facts and show themselves as the injured party, most thinking people ~do~ have an issue with this sort of behavior. If you don't, well that's fine, good for you.
[ reply to this | link to this | view in chronology ]
Add Your Comment