Online auction giant eBay Inc. has settled a lawsuit alleging its online payment service had been violating a patent governing the personalized e-mail links sent to customers.
The settlement includes a cross-licensing agreement between San Jose, Calif.-based eBay and Redwood City-based Tumbleweed Communications, which filed the suit against PayPal in May 2002. Tumbleweed later expanded the suit to include eBay after the auction service acquired PayPal for $1.5 billion. EBay has repeatedly denied Tumbleweed's allegations.
Neither eBay nor Tumbleweed disclosed the financial terms of their licensing agreement. Tumbleweed had alleged PayPal violated its patents for sending personalized links through e-mail. PayPal uses the links to alert customers about a financial transaction.
Tumbleweed, a software company with less than $50 million in annual revenue, previously used the same patent claim to obtain licensing agreements with several other companies, including Hallmark and American Greetings.
"We are pleased to put our differences behind us," said Jeff Smith, Tumbleweed's chief executive officer.
EBay said it plans to work with Tumbleweed on ways to improve e-mail security.
Tumbleweed's shares gained 49 cents Monday to close at $8.45 on Nasdaq, whereas eBay's shares rose $1.62 to close at $64.62.
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