The deal, which the company hopes to complete by the end of the year, would secure eBay’s overwhelming grip on online transactions, but has raised concerns that customers may face rate increases to use the electronic payments method once eBay phase out their own less successful Billpoint service.
Now a major US credit card company have filed a lawsuit against PayPal, claiming a patent infringement.
America’s third-largest credit card company, First USA Bank, a subsidiary of Bank One Corp, say PayPal are violating their patents on a Cardless Payment System, which allows computer users to make financial transactions without having to remember their account information.
The federal suit, filed in Delaware on September 6, claims PayPal’s infringement has caused the bank irreparable harm.
PayPal say they haven’t violated any patents, although they have acknowledged the possibility of an intellectual property dispute over the core technology.
eBay would be vulnerable to any patent claims against PayPal over Internet payment systems, according to the merger agreement submitted to the Securities & Exchange Commission in July.
The online giant’s famously deep pockets that could defend the company against protracted litigation are currently being targeted by lawyers representing PayPal shareholders who don’t think they’re getting enough for their stock.
As previously reported, a group of shareholders – who have called eBay’s offer of 18 per cent above the stock market valuation as “grossly inadequate” – initiated litigation opposing the eBay acquisition in July.
Shareholders are scheduled to vote on October 3 on the merits of the takeover.
eBay face new problems over PayPal deal
PAYPAL, the leading online payment service, are facing a new challenge that could scupper eBay’s attempt to take them over.
