AT&T Sues PayPal and eBay for Patent Infringement

theodp writes "AT&T on Thursday fired the latest shot in the escalating Web patent wars, filing suit against PayPal and eBay. AT&T issued a press release alleging that the PayPal and BillPoint payment systems infringe on AT&T's 1994 patent for the mediation of transactions by a communications system. Besides e-Payments, the AT&T patent purports to cover e-Voting, e-Auctions, e-Gifts, e-Donations, e-Wishlists and e-Referrals. e-Gad! e-Yikes!"

Comments

This is the second time...

[i_want_you_to_throw_]

This has erupted. First USA Bank sued PayPal in September 2002. A year later PayPal countersued the company (now known as Bank One) and Bank One Delaware, also on patent infringement grounds. The companies settled those suits last month without disclosing the terms.

Apparently this would also cover 2checkout and other paying services as well. The question is, can Microsoft and other browser makers be sued for being able to submit credit card info through their browsers? It seems overly broad but then again aren't all tech patents?

Scope of patent

[watchful.babbler]

The patent (USPTO link here) covers any system in which a purchaser provides credit information to a mediating party, who then approves the payment and provides authorization and an identifying value to the seller. IANAIPL, but this patent covers a whole lot of ground. Obviously, if you as an e-vendor are processing credit card claims yourself, the patent doesn't apply. But the patent pretends to apply to a whole set of services, an argument that doesn't to my untrained eyes seem to follow from the claims:

Another use for such a system is a gift or donation registration service. An entity seeking gifts or donations would provide a list of what it needed to the registration service. Entities wishing to make gifts or donations would call the registration service and the service would mediate a transaction between the donor and the source of the item to be given or donated.

Still other uses involve assigning available resources of a given type to clients who call for assistance. One example of such a system is a lawyer referral service. The referral service would maintain a database of lawyers and would assign lawyers to clients on a basis which assured that each lawyer would get a fair share of the referrals. The system would determine from the database which lawyer was to get the referral and would connect the lawyer with the calling client.

Additionally, a communications system may be advantageously used to mediate a transaction such as an auction. Customers could make bids. The communications system would validate the bids and provide them to the auctioneer, who would know only the mounts, and not the identities of the bidders. The communications system could then indicate to each participant the current highest bid and solicit new bids until a single highest bid remained. In some embodiments, the communications system itself might play the role of auctioneer. In such an embodiment, the transaction manager would keep track of the current highest bid, would inform the participants of that bid, and when bidding had ceased, would complete the transaction with the highest bidder.

eBay itself seems to be safe as (from what I understand of the auction site) it doesn't handle any payments directly, PayPal excepted. The claim over a lawyer referral service doesn't make much sense to me, since it doesn't suggest that the mediating service handle billing and payment, while the gift service ... well, it seems a stretch to call a recipient of a gift a "vendor" (as in claim 1).

I remember a book from several years ago in in which a cyberpunk lawyer (it was a very strange piece of fiction, yes) used the theory of adverse possession (What's that?) to claim title to a piece of intellectual property left unimproved by its owner. I'm starting to think that implementing such a theory in IP law, as insane as that is, would be an improvement over the current situation ....

Re:What's next?

[u-235-sentinel]

"I am seeing a situation where ATT would require licensing for every credit-card accepter on the Internet. That's not so fun."

That's a scary thought. Sounds alot like what SCO is doing (I know but I had to say it). IANAL however I have spent some free time reading through the laws regarding this sorta junk. I'm getting the impression that suing a 'user' of a product for use of a product isn't legal.

For example, if I read the New York Times and come across material I have no right to read am I liable? From what I've gathered it's not my fault nor my problem. The New York Times will be liable for their product not me the consumer.

On topic now... most of these patents look rather vague. I've looked over a couple of them already and it's about as undefined as you can get. What is the patent office doing? Accepting money and issuing a patent without looking at what they did?

Joy...

[thenextpresident]

As someone in the ewallet industry developing a new product that is different from other ewallet solutions, this is slightly disturbing. To think that a common concept such as accepting a credit card is patented. Of course, AT&T will have to go after all those credit card terminals now, because they all do the same thing. A consumer and a merchant processing a credit card through a trusted third party (the one leasing the terminal to the merchant).

However, seeing as my company is small, I have no real worries. Oh, sure, they may sue once they have something big to sue for, buy by then, I can afford to fight back. Hopefully, PayPal will fight for me. By fighting AT&T's patent, they could make it difficult for AT&T to sue for it in the future.

Of course, PayPal could also just make a deal, and this won't get taken care of in court.

Oh, the fun of e-commerce. You know, makes me want to patent some of my ideas, not to sue people, but just to make sure people don't sue me or my company. Patenting to defend yourself...hrm, maybe I could patent that? Of course, that is probably been said on /. before.