SAN JOSE, CALIF. AT & amp;T sues eBay over PayPal system

AT & amp;T says it has a patent on the payment system eBay uses.
SAN JOSE, Calif. (AP) -- AT & amp;T Corp. reached out and smacked eBay Inc. with a patent infringement lawsuit, alleging the online auction company has been using a payment system that the telecommunications giant developed more than a decade ago.
The case, filed Thursday in federal court in Delaware, comes on the heels of an August verdict in which a Virginia judge ordered eBay to pay $29.5 million to an inventor who accused the company of stealing his ideas for fixed-price sales formats. EBay is appealing that case.
AT & amp;T's suit demands that eBay pay an undisclosed amount in licensing fees because its lucrative PayPal division functions as a "trusted intermediary" between buyers and sellers who may not know each other.
The system -- widely regarded as critical to eBay's gangbuster growth and a boon to e-commerce in general -- lets buyers provide credit card or bank account information to a reliable third party instead of individual sellers around the world. Buyers merely have to trust PayPal, and they don't have to worry about disreputable sellers' using sensitive financial data for fraudulent purposes.
AT & amp;T says three senior engineers working for the phone company filed for a patent in 1991 for exactly such a process, which they called "Mediation of Transactions by a Communication System." The patent was granted in 1994, AT & amp;T said.
EBay spokesman Chris Donlay dismissed the lawsuit as "meritless," and he said customers should count on continuing to use PayPal.