AT&T Slams PayPal

BEDMINSTER, New Jersey -- The mud slinging between AT&T Corp. and eBay, parent company of PayPal, got off to a raucous start this week when the telephone carrier accused America's favorite online auction site of patent infringement.

AT&T is claiming that eBay has been infringing on its technology for secure online payment processing, used by both eBay's former payment service Billpoint and its current payment processing service PayPal, which eBay purchased in 2002.

The purchase of PayPal signaled a pinnacle time for the auction house, and both business units have profited immensely from the steady inflow of transaction fees PayPal charged eBay auctioneers.

The technology in question supports third-party payment transactions between a buyer and a seller. The buyer pays PayPal by either check or credit card, the transaction is processed for a fee, and then the money is deposited into the PayPal member's bank account.

AT&T claims its patent covers the method of using a trusted third-party to complete a transaction over the Internet, although it has never used the technology for any of its own services.

AT&T says that it developed the secure payment technology in 1991 and then received the patent in 1994. The telephone carrier claims that eBay's infringement has gone on since 1999 and it is seeking unspecified damages. AT&T is also requesting a Delaware court to prevent eBay and PayPal from using the technology until the terms of use have been determined.

AT&T has also expressed interest in having eBay and PayPal license its technology in the future, although after a one-year period of negotiations that eventually led to the lawsuit, eBay has refused to concede to AT&T's demands.

According to AT&T, the basis of the lawsuit is sound and the company is simply trying to enforce it portfolio of patents.

"EBay and PayPal have refused to compensate us for patented technology, and so we're forced to take this to the courts," said an AT&T spokesperson.

XBiz was not able to reach eBay or PayPal representatives for comment, but eBay has been quoted by Reuters as saying that the lawsuit is "meritless," and that PayPal's more than 11 million users can continue to rely on the popular payment processing service in the future.

PayPal reported $106.4 million in revenue in the third quarter of 2003, nearly double from the same period last year, and eBay continues to be the Teflon King in terms of its resilience to economic uncertainty.

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Roxie Rae Relaunches Site Through XSiteAbility

Roxie Rae has relaunched her site through XSiteAbility.

Federal Appeals Court Vacates FTC 'Click to Cancel' Rule Pending Review

The U.S. Court of Appeals for the 8th Circuit on Tuesday vacated the Federal Trade Commission’s “click-to-cancel” rule aimed at making it easier for consumers to cancel online subscriptions, pending further review.

FSC Drops Florida AV Lawsuit in Wake of SCOTUS Decision

A U.S. district court judge granted on Tuesday a motion by Free Speech Coalition to dismiss the trade association’s lawsuit over Florida’s age verification law, a case that had been on hold pending the Supreme Court’s recent ruling on the constitutionality of state AV laws.

Ukrainian President Responds to Porn Legalization Petition

President Volodymyr Zelensky responded Tuesday to an OnlyFans model’s petition to decriminalize pornography in Ukraine, stating that he would wait for the legislative process to play out “in accordance with established procedure.”

Only Tax Deductions Joins Pineapple Support as Sponsor

Adult industry accounting firm Only Tax Deductions has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

Adult Empire Launches 'Conversations' Podcast Series

Adult Empire has launched a new official podcast series hosted by Nicole Chappelle and Charlie.

Sex Work CEO Launches 'Teams Plan' for AI Assistant

Sex Work CEO has introduced the new Teams Plan for its AI-powered, NSFW text generator, GPTease.

2025 XBIZ Amsterdam Website Launches With Call for Speakers

XBIZ is pleased to announce that the website for its annual European conference, XBIZ Amsterdam, is now live.

NC Governor Vetoes Bill Targeting Adult Industry, Override Possible

North Carolina Governor Josh Stein today vetoed a bill imposing new regulations that adult industry observers have warned could push adult websites and platforms to ban most adult creators and content.

25,000 Sign Petition to Legalize Pornography in Ukraine

An OnlyFans model’s petition to decriminalize pornography in Ukraine has amassed the 25,000 signatures required for official consideration by President Volodymyr Zelensky.

Show More