PayPal pays $7.5 million to settle patent suit

VANCOUVER, British Columbia

A subsidiary of LML Payment Systems has settled a patent dispute with PayPal.

LML filed a patent infringement complaint against numerous financial institutions and eBay Inc.'s online payments company PayPal in 2008, saying they had infringed on its technology that can read information from a consumer's check, credit card or other input and then debit their account. The case is ongoing in U.S. District Court in eastern Texas.

LML, which provides payment processing for e-commerce and brick-and-mortar businesses, had settled or was in the process of settling with a number of the banks, including CitiGroup Inc. and HSBC Holdings.

Under the terms of the PayPal settlement, LML said PayPal agreed to pay $7.5 million. The terms give PayPal a fully paid-up license to certain patents for electronic check conversion transactions.

PayPal Inc. did not immediately return a message seeking comment.

LML said the first phase of the patent trial that was scheduled to begin March 21 has been cancelled due to the settlements. The next two phases are still set to begin in October.

Shares of LML Payment Systems Inc. fell 20 cents, or 4 percent, to $4.89 in afternoon trading. Shares of eBay slipped 2 cents to $31.06.