AT&T Patents Trusted Intermediaries, Sues PayPal

R. A. Hettinga rah at
Fri Nov 21 09:03:47 EST 2003

"PayPal and eBay have infringed AT&T's U.S. patent that covers transactions
in which a trusted intermediary securely processes payments over a
communications system such as the Internet."

I wonder what American Express, VISA (and Plus), MasterCard (and Cirrus),
Diner's Club, NASDAQ, Autex, Telerate, and even Quotron -- not to mention
CRESTCo, DTC, and SWIFT -- would have had to say about *that*?

*This* should be fun...



Anglo-American history

Thursday, November 20, 2003
AT&T Files Patent Infringement Suit Against PayPal, Inc., and eBay, Inc.

AT&T Corp. today filed a patent infringement suit against PayPal, Inc. and
eBay, Inc., in federal district court in Delaware.

AT&T alleges that, through the use of their online payment systems, PayPal
and eBay have infringed AT&T's U.S. patent that covers transactions in
which a trusted intermediary securely processes payments over a
communications system such as the Internet. The use of a trusted
intermediary ensures that one party will not have to disclose sensitive
information, such as a credit card number or bank account number, to the
other party to the transaction. AT&T's lawsuit seeks compensation for
PayPal's and eBay's unauthorized use of the patented technology.

More than a year ago AT&T notified both PayPal and eBay that they were
using technology covered by AT&T's patent in the PayPal and BillPoint
payment systems. AT&T offered to license the patented technology to each of
the companies.

AT&T has attempted to reach an amicable agreement regarding this matter
with eBay and PayPal. AT&T has invested hundreds of millions of dollars
every year in research and development, and the company seeks to protect
its inventions by licensing its patents to those who use its intellectual
property. Because the two companies have refused to pay for a license to
use the patented technology, AT&T has been forced to bring the matter to
the court.

AT&T's patent was originally filed with the U.S. Patent and Trademark
Office in 1991. In July of 1994, the Patent and Trademark Office granted
AT&T U.S. Patent No. 5,329,589 for its invention.

About AT&T

AT&T ( is among the premier voice and data communications
companies in the world, serving businesses, consumers, and government. The
company runs one of the most sophisticated communications networks in the
United States, backed by the research and development capabilities of AT&T
Labs. A leading supplier of data, Internet and managed services for the
public and private sectors, AT&T offers outsourcing and consulting to large
businesses and government. The company is a market leader in local, long
distance and Internet services, as well as transaction-based services like
prepaid cards, collect calling and directory assistance. With approximately
$37 billion of revenue, AT&T has about 40 million residential customers and
4 million business customers, who depend on AT&T for high-quality
communications. AT&T has garnered several awards for outstanding
performance and customer service.

The foregoing contains "forward-looking statements" which are based on
management's beliefs as well as on a number of assumptions concerning
future events made by and information currently available to management.
Readers are cautioned not to put undue reliance on such forward-looking
statements, which are not a guarantee of performance and are subject to a
number of uncertainties and other factors, many of which are outside AT&T's
control, that could cause actual results to differ materially from such
statements. For a more detailed description of the factors that could cause
such a difference, please see AT&T's filings with the Securities and
Exchange Commission. AT&T disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. This information is presented
solely to provide additional information to further understand the results
of AT&T.

R. A. Hettinga <mailto: rah at>
The Internet Bearer Underwriting Corporation <>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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