Groupon Patent Dispute Ends With $57 Million Settlement

IBM has a patented e-commerce technology which the company believes Groupon stole and used without permission. It launched a massive lawsuit against Groupon through a Delaware court in 2016, asking for a whopping $167 million to cover damages. The reasoning? IBM said that its technology was important to developing the Internet and could be licensed out to other companies. The tech was never licensed to Groupon.

Part of the case was dependent on a couple of IBM patents important to an Internet building block called Prodigy which was built and developed in the 80s. IBM has licensed the relevant tech to companies like Alphabet, Amazon, LinkedIn, and Twitter. The revenue IBM takes from licensing this patent amounts to a shocking $1.2 billion. Of course, none of that came from Groupon. Because Groupon used the technology without paying up, IBM’s bottom line was damaged. The $1.2 billion figure could have been higher.

Groupon’s lawyers purported that there was never any evidence of wrongdoing, and requested that a judge dismiss the case. It didn’t happen.

The case was ultimately decided when a jury agreed with IBM. Groupon was told to pay an estimated $83 million to cover IBM’s loss.

Of course, that wasn’t all. During the settlement process, Groupon and IBM made a deal to license technology over an extended period of time. IBM’s general manager used the circumstances as an opportunity to promote the growth of IBM’s intellectual property licensing, and why not? IBM won.

Groupon probably wasn’t happy with the eventual agreement, but the company is certainly pretending it is. Its vice president of global communication, Bill Roberts, acknowledged that the agreement will help ensure that Groupon can continue to provide a wealth of products and services to the consumers who want or need them.

Over recent years, the number of IP disputes have continued to increase. In 2001, there were 1557 cases reported. That number skyrocketed to a high of 3074 in 2017. With intellectual property becoming more important, the number of cases will likely continue to go up.

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