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Groupon to pay IBM $57M to settle patent dispute

Groupon to pay IBM $57M to settle patent dispute

IBM generates more than one billion dollars per year from licensing activities

Credit: Dreamstime

Online marketplace Groupon will pay US$57 million to IBM to settle an intellectual property dispute.

Big Blue’s lawsuit, filed in U.S. court in Delaware in 2016, alleged Groupon used IBM’s patented e-commerce technology without authorisation.

A jury sided with IBM in July, ordering Chicago-based Groupon to pay US$83 million in damages, with the settlement also including a long-term patent cross-license agreement between the companies.

William Lafontaine, IBM’s general manager of intellectual property, said in a statement the deal demonstrates the value of the intellectual property the Armonk, New York-based company derives from its annual investment of more than US$5 billion in research and development.

Bill Roberts, Groupon's vice president of global communications, said in a statement that the license it acquired to IBM's patent portfolio "will enable Groupon to continue to build amazing products for consumers and small businesses around the world."

During the trial, IBM had asked the jury to award US$167 million in damages, saying it developed widely licensed technology crucial to the development of the internet.

Two of the IBM patents at issue in the case relate to Prodigy, a late-1980s precursor to the web.

The case was closely watched in the technology industry because it offered a glimpse into IBM’s efforts to license its large patent portfolio to other companies.

An IBM licensing executive testified that Amazon, Facebook, Alphabet’s Google, LinkedIn and Twitter have each paid IBM US$20 million to US$50 million as part of cross-licensing deals that gave them access to the patent portfolio.

In 2017, IBM generated about US$1.2 billion in revenue from its licensing activities.

During the trial, Groupon's lawyer portrayed IBM as using outdated patents to squeeze money out of other tech companies with threats of litigation. Groupon on 19 September had asked a judge to throw out or reduce the verdict, calling it unsupported by the evidence.

(Reporting by Jan Wolfe; editing by David Gregorio and Marguerita Choy)

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