Groupon to pay IBM $57m to settle patent dispute

IBM originally sought $167 million in a lawsuit which alleged Groupon was failing to pay for licenses in which its entire business model was dependent.
Written by Charlie Osborne, Contributing Writer

IBM will receive $57 million from Groupon to drop a long-running patent between the two companies.

On Monday, the tech giants said that all patent lawsuits have now been settled due to the payment -- alongside an agreement to create a patent cross-licensing agreement which will be held between the two parties over the long-term.

The original lawsuit was launched back in 2016, in which IBM claimed that e-commerce marketplace Groupon had willfully infringed upon patents belonging to IBM and continually refused to enter discussions to license any of the technologies.

In July, IBM requested $167 million in damages over the alleged infringement in a Delaware federal court, arguing that the foundations of Groupon's e-commerce business model were built from IBM technologies.

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Google, Amazon, and Facebook have licensed the same patents and each company pays between $20 million and $50 million in individual licensing agreements.

The technologies include a single sign-on patent and a 1980s patent which relates to Prodigy, a precursor to the Internet, as well as patents relating to ways to show applications and ads while reducing strain on servers.

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Groupon argued that the technologies at the heart of the case were a core part of the modern Internet, and IBM was overreaching by claiming to own them.

After a two-week trial in the same month, IBM won the patent dispute and was awarded $83 million. While this is only roughly half of what IBM originally sought, Groupon has now received a further discount of $26 million by entering a licensing deal with IBM.

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"IBM invests over $5 billion annually in research and development," said William Lafontaine, IBM's general manager of intellectual property. "This agreement further demonstrates the value of our intellectual property that results from this innovation. We're pleased this matter has been resolved."

As part of the new settlement, IBM will also "consider making available certain Groupon products and exclusives to its employee base as part of its corporate benefits offer," according to the company.

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