TELEPHONE GIANT AT&T has filed a legal action against Ebay and Paypal claiming that the auction giant is breaching patents it owns. According to the law suit, filed in a US federal court yesterday, both Ebay and Paypal technology breaches an AT&T patent for transactions using trusted intermediaries processes payments over the Internet. The US giant wants Ebay and Paypal to compensate it for using what it claims is its technology.
The patent in question is 5,329,589, which describes "Mediation of Transactions by a Communication System". What this patent describes, essentially, is the sale of goods using a credit card or a bank account number through a third party, which completes the transaction without passing on customer-sensitive information.
According to the law suit, AT&T had approached Ebay/Paypal to discuss the alleged infraction, but the firm wouldn"t stump up the cash. One inventor of the 589 patent, Alexander Fraser, was a chief scientist at AT&T, while another, Roy Weber, worked for AT&T Bell Labs. The third, Carlos Perea, was a manager of AT&T"s business services.