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IBM Demands $167 Million from Groupon Over Patents Dispute

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International Business Machines (IBM) on Monday asked jurors to award it $167 million in a lawsuit against Groupon alleging the online coupon business operator is using its patent technology illegally.

A lawyer for IBM, John Desmarais told a jury in federal court in Delaware that the Chicago-based Groupon, which arrived "relatively late" to e-commerce, is using its patented fundamental technology without any agreement with IBM. Many companies including Facebook, Amazon, and Google have acquired a license from IBM with amounts in the range of $20 million and 50 million each company, but Groupon has turned down an agreement, Desmarais said.

"The new kid on the block refuses to take responsibility for the technology it’s using," Desmarais said.

Lawyer Desmarais told jurors IBM spends a lot of money annually on research and only willing to license its patients reasonably. Groupon was sued because it refused to negotiate a licensing deal, IBM had no other choice, he said.

David Hadden, a lawyer for Groupon argued that IBM is making claims beyond the scope of its patents and claiming to own the building blocks of the worldwide web.

Hadden questioned if IBM's patents cover the worldwide web “They do not and that is because IBM did not invent the worldwide web,” he told jurors.

To provide a glimpse of IBM's efforts to make revenue from its vast patent portfolio, an IBM executive will be testifying the existence of licensing deals IBM has with various technology companies such as Google and Facebook during the two weeks trial.

The New York-based IBM which has for the past 25 years secured more U.S. patents than another company undeniably invests a lot in research and development. In 2017, IBM reported $1.19 billion in intellectual-property licensing revenue.

IBM Claims

In 2016, the IBM sued Groupon with claims of infringing four patents. At least two of the four patents in the previous lawsuits relate to the current claims, Prodigy, a system that reduces server load while showing advertisements and applications, developed in the late-1980s by IBM and others.

IBM also said it patented the technology that allows users to log in to a retailer's website using Google or Facebook account, also known as "single sign-on."

Hadden opposed IBM’s claims saying that the tech giant is unreasonably seeking money from all significant internet companies.

“We are here because IBM has another business that IBM does not talk about in its commercials,” Hadden said. “In that business, IBM uses its huge stock of patents as a club to get money from other companies.”

Online advertising and marketing companies are watching the lawsuit closely. According to Bloomberg, about 10 companies, including LinkedIn Corp, Go Daddy, and Twitter Inc have asked for the protection of their information in relation to past IBM patent deals.

U.S District Judge Leonard Stark presiding IBM-Groupon lawsuit in October last year ruled against IBM in a similar patent infringement claim involving Priceline. IBM is still appealing.

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