Lawsuit Delays PayPal IPOLawsuit Delays PayPal IPO

The highly anticipated public offering of PayPal Inc., the online payments company, was delayed Thursday by a lawsuit alleging patent infringement by a competitor, CertCo Inc. PayPal said in an S-1 document filed with the Securities and Exchange Commission on Thursday: "We believe that we do not infringe CertCo's patent, and that CertCo's assertions are without merit."

It continues: "In analyzing CertCo's patent, we have noted that all of the patent's claims have as an element that a system send an 'authenticated' or 'verifiable' 'payment advice message.' But our service does not send either 'authenticated' or 'verifiable' 'payment advice messages.' "

"CertCo certainly has more leverage in doing this at the last minute," says Jupiter analyst James Van Dyke. "This has been one of most publicized IPOs," he adds. "A lot of people in the new economy hope PayPal is like a torchbearer at the Olympics, pulling us out" of Wall Street's tepid enthusiasm for tech startups.

A new date for the offering has not been set.

CertCo, which installs digital certificates on computers to verify them, primarily for business-to-business transactions, did not return calls for comment.