IBM awarded $83 million in Groupon e-commerce patent dispute

If the court had not found in IBM's favor, it may have had serious repercussions for the firm's cross-licensing deals.
Written by Charlie Osborne, Contributing Writer

IBM has been awarded $83 million in a dispute with Groupon concerning patents which pre-date the Internet as we know it today.

Late last week, a US court in Delaware found in IBM's favor following a two-week trial.

As reported by Reuters, Groupon was found to be using IBM's patented technology without a license.

The conflict between IBM and Groupon began back in 2016. IBM had originally sought $167 million in damages from Groupon for the infringement of patents relating to single sign-on technologies, how to show apps and adverts without placing vast amounts of strain on servers, and Prodigy -- a precursor to today's modern Internet created in the 1980s.

IBM claimed that despite a number of attempts to thrash out a licensing deal, Groupon failed to communicate or consider the issue seriously.

During the court case, it emerged that the same patents are lawfully licensed by Google, Amazon, and Facebook, of which the companies pay between $20 million and $50 million each for rights to the portfolio.

IBM said that while other companies understand the need to license these patents. Groupon wilfully infringed upon the patents and went so far as to build an entire business on unlicensed technologies.

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Groupon argued that IBM was attempting to squeeze profits out of outdated patents and the ideas they describe can now be considered as obvious -- and therefore should not have been awarded in the first place.

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In addition, the e-commerce giant said that the damages requested were not reasonable.

It does not seem, however, that the court agreed.

"We continue to believe that we do not infringe on any valid IBM patents," a Groupon spokesperson said. "To the extent these patents have any value at all -- which we believe they do not -- the value is far less than what the jury awarded."

The knock-on effect of the trial, should it have gone the way Groupon preferred, could have been serious.

If the patents had been considered antiquated and not grounds to sue, then this may have cast doubt on the legitimacy of IBM's current cross-licensing deals with other companies -- as well as potentially the firm's older portfolio as a whole. Such doubts could have cost IBM dearly.

However, as noted by IBM lawyer John Desmarais, the court's verdict is "a vindication for IBM's licensing program."

"IBM invests nearly $6 billion annually in research and development, producing innovations for society," an IBM spokesperson said. "We rely on our patents to protect our innovations. We are pleased by the jury's verdict."

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