Alibaba Group is stocking up on patents ahead of its pending initial public offering (IPO) in the United States, as it possibly looks to sidestep the legal potholes others like Facebook and Twitter faced before their respective IPOs.
The largest e-commerce operator in China, Alibaba has secured 102 patents in the U.S. to date, including 20 it bought from IBM last year, according to a Bloomberg report, which cited research firm Envision IP. The Chinese tech giant also has applied for more than 300 other patents encompassing technology such as payment processing, image search, and product recommendations.
Maulin Shah, managing director of Envision, said in the report: "It's a smart move. When a company announces IPO plans, they instantly become a target from competitors already in the market who want to hamper the IPO or those who see it as an opportunity to exploit the company at a vulnerable time."
Before their respective IPOs, Facebook had only 12 patents while Twitter had nine, and faced claims their technology infringed on others' intellectual property. Yahoo, for instance, filed a patent lawsuit against Facebook in March 2012, alleging the social media giant infringed on 10 of its patents. The latter then purchased 750 patents from IBM and countersued Yahoo, but not before having to amend its IPO filing a couple of times due to the lawsuit. Facebook eventually went public two months after it settled the dispute with Yahoo.
Stocking up on patents isn't an uncommon way for companies to avoid litigation. Google, for instance, purchased 1,023 patents from IBM in 2011 as part of efforts to beef up its intellectual property prowess in defense of the Android platform.
Google's 2011 buyout of Motorola Mobility also was perceived to be about powering up its patent shield, especially since billionaire investor Carl Icahn had noted in 2011 that Motorola Mobility, with 17,000 approved patents and another 7,500 pending, held "one of the strongest and most respected patent portfolios in the industry". Google in January 2014 sold off the Motorola unit to Lenovo for US$2.91 billion.
Alibaba is reportedly aiming to hold the biggest IPO in U.S. with the addition of new shares that could push its listing beyond US$20 billion, outstripping Visa's US$19.7 billion in 2010.