The patent was filed with the US Patent and Trademark Office in 1991, and granted to AT&T in July 1994. It covers specifically 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.
PayPal and eBay were advised by AT&T over a year ago that their payment systems were infringing on the patent. EBay's system, BillPoint, has now been phased out following eBay's acquisition of PayPal, but generated "significant revenue" in the time that it was running.
Both companies have refused to pay for a license in respect of the patent – so AT&T says it has been "forced to bring the matter to court," seeking compensation.