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:
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.