AT&T sues eBay for patent infringement

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

The suit was filed Thursday 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. This third party safeguards payment details such as credit card numbers. AT&T claims the systems infringe its patent 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, New Jersey company said.

EBay is one of the world's largest online auction sites. Last month the San Jose, California, company reported third quarter net income of US$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 was not immediately available for comment.

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