Ebay has been slapped with a massive patent suit which could cost it at least $3.8 billion.
XPRT Ventures of Connecticut said it shared the six patents - which cover online payment systems including PayPal - with eBay in confidence.
The IPR holding company claims that eBay used this proprietary information to modify and incorporate PayPal into its e-commerce platform and to roll out several features incorporated into eBay's payment systems.
These include PayPal Pay Later, PayPal Buyer Credit, PayPal's Balance Manager Service and the Checkout payment system.
And XPRT claims that eBay not only infringed its patents, but then added insult to injury by filing patents for the technology itself, one named 'Method and System to Automate Payment for a Commerce Transaction' and filed in April 2003.
But the patent applications were refused four times because of XPRT's prior patents - which proves, XPRT says, that eBay not only knew the technology was XPRT's, but that it was patentable.
"According to the complaint, although eBay knew of the confidential and proprietary nature of the Inventors' disclosures, eBay nevertheless filed a US patent application, using the same attorney who had reviewed XPRT's disclosures, which incorporated numerous disclosures set forth in XPRT's patent applications," says XPRT's lawyers, Kelley Drye & Warren.
It gets worse, says XPRT, which claims that a confidentiality agreement signed by both parties was later unilaterally altered by eBay to make it seem as if the confidentiality requirement only arose when eBay's own patent was filed.
The suit has been filed in the District Court in Delaware.