IBM seeks $167M in Groupon e-Commerce suit

Avatar By Le Williams | 2 years ago

Lawyers for IBM seek damages for patent infringement involving
Groupon Inc., who has built its online coupon business on the profits of International Business Machines Corp.’s e-commerce inventions without permission.

In the U.S. District Court trial located in Wilmington, Delaware, IBM requests court jurors to award the company $166.5 million for using four patented technologies.

IBM lawyer John Desmarais said Chicago-based Groupon arrived “relatively late” to e-commerce and piggybacked on existing technologies. Many companies, including Amazon.com Inc. and Facebook Inc., have bought licenses to use the company’s patented technology, while Groupon has failed to acquire legal rights.

“The new kid on the block refuses to take responsibility for the technology it’s using,” Desmarais said. “IBM spends literally billions of dollars every year on research and development to make our lives easier.”

In response, Groupon lawyer David Hadden said IBM does not use the patents in question, which he explained are invalid. Hadden further expressed how IBM uses its “huge stock” of patents “as a club” to ensure that any company doing business on the web must go through IBM.

“We are here because IBM has another business, a business it doesn’t talk about in its TV commercials,” Hadden said.

IBM has won the most U.S. patents in each of the past 25 years, including a record 9,043 in 2017. The company reported $1.19 billion in intellectual-property licensing revenue in 2017.

IP licensing contributes less than 2 percent to IBM’s revenue, but is a high-margin business for the company, according to Matt Larson of Bloomberg Intelligence.

A Groupon victory, Larson said, “could challenge IBM’s ability to renew existing deals once they expire.” The case’s outcome, he said, “could have implications for the intervenors listed or others that IBM may try to work with moving forward.”