XPRT claims to hold significant patents covering e-commerce payment systems and methods. The lawsuit alleges trade-secret theft and patent infringement involving six XPRT patents. XPRT asserts eBay stole the idea and method of payment used in PayPal and similar electronic-payment systems.

eBay couldn't be immediately reached for comment, but has said it will defend itself vigorously.

"When you have big numbers like this, typically the plaintiff is looking for a settlement amount that is substantially less. But still, it would undoubtedly be something in the billion-dollar range," said Rob Enderle, principal analyst at the Enderle Group. "They are alleging extreme improper behavior, drifting well over into fraud. If this is true, the likelihood that a court would throw the book at eBay is pretty high. Courts have virtually no sense of humor when it comes to fraud. But we haven't heard eBay's side of the story."

The Case Against eBay

The complaint filed by Kelley Drye and Warren, the law firm representing XPRT, alleges that the investors listed on XPRT's patents confidentially shared the patent applications with eBay, along with ideas on how to implement the concepts described in the patents. XPRT alleges that eBay then incorporated those concepts into PayPal, infringing on confidential and proprietary material.

"XPRT claims that eBay's upper management knew, or should have known, that the unauthorized use of inventors' confidential and proprietary material ran the risk of patent infringement if XPRT's patent applications were issued as patents," the law firm said.

According to the complaint, although eBay was aware of the confidential and proprietary nature of the inventors' disclosures, it filed a patent application anyway -- and did so using the same attorney who reviewed XPRT's disclosures.

"However, eBay did not disclose XPRT's patent applications to the U.S. Patent and Trademark Office (USPTO) until a search report issued for eBay's corresponding foreign patent application cited one of XPRT's published patent applications as relevant prior art," the law firm said. "Only then did eBay cite XPRT's published patent application to the USPTO. eBay's U.S. patent application has been rejected four times based on the earliest filed XPRT patent application, which was filed more than two years before eBay's patent application was filed."

A Bold Allegation

In light of eBay's duty of candor before the USPTO to prosecute only claims believed by it to be patentable, XPRT asserts that eBay has admitted the patentability of the subject matter of numerous claims contained in XPRT's patent applications.

The complaint cites a confidentiality agreement provided by eBay and signed by XPRT's inventors and claims the effective date was later unilaterally altered by eBay's senior patent counsel. It said the change made it appear as if eBay's obligation to keep XPRT's information confidential only arose on the date eBay's patent application was filed, when in fact eBay's confidentiality obligations arose significantly earlier.

"Altering a document would be fraudulent, and an attorney doing that would be grounds for disbarment. That would be an unusual risk. So you wonder," Enderle said. "People are people, and sometimes they will take risks. The economic benefits of doing something like this might be high depending on the investment of the attorney in eBay. But still, it would be very unusual."