AT&T sues eBay for patent infringement

The lawsuit targets a payment system used by eBay and PayPal

U.S. telecommunications giant AT&T Corp. has sued eBay Inc. and its PayPal Inc. unit alleging that the payment systems the companies use infringe on an AT&T patent.

The suit was filed today in U.S. federal court in Delaware, AT&T said in a statement. EBay completed its acquisition of PayPal last October.

The eBay and PayPal payment systems involve a trusted intermediary to process payments over the Internet, by safeguarding payment details such as credit card numbers. AT&T claims that the systems infringe on its patent No. 5,329,589, awarded in July 1994 for "mediation of transactions by a communications system."

EBay and PayPal refused to license the patented technology, so "AT&T has been forced to bring the matter to court," the company said. AT&T first contacted eBay and PayPal about the alleged patent infringement over a year ago, the Bedminster, N.J.-based company said.

EBay is one of the world's largest online auction sites. Last month, the San Jose-based company reported third-quarter net income of $103.3 million on revenue of $530.9 million and said it had a record 85.5 million registered users at the end of the quarter.

EBay officials weren't immediately available for comment.

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