Since 2016, IBM and Groupon have been engaged in a legal battle over patents. IBM has been accusing Groupon of violating four of its e-commerce IPs without permission. But IBM is now hitting them with a lawsuit where they are seeking $167 million from Groupon. Where are they getting this number? IBM is telling the court that companies like Amazon and Facebook have bought licenses to use their technology for $20 million – $50 million, so Groupon needs to do so as well. IBM is really mad about this, and I mean, I would be too if I had a product worth $20 + million. And while they’re going at it in the right way, they sound a bit like crybabies in all of this. IBM lawyer, John Desmarais had this to say in a statement:
“The new kid on the block refuses to take responsibility for the technology it’s using. IBM spends literally billions of dollars every year on research and development to make our lives easier.”
Again, I completely agree with what IBM has to say, but they just sound like sore losers about it. I mean, I”m not in the market to make a judgment call as I don’t have this kind of money to lose, but calling them “the new kid on the block”, doesn’t really feel like it’s going to make an impact. It’s like name calling, but it’s not really an insult. In fact, this is having the same impact, in my opinion, as when Trump called Kim Jong Un “Little Rocket Man”. The guy had never even heard the song “Rocket Man”, so it’s like the saying – its falling on deaf ears.
Two of the patents involved in the lawsuit are old intellectual properties that came out back in the 1980s. More specifically, the newest intellectual properties include “single sign-on” technology that allows users to log into a website with their Facebook or Google accounts. Groupon lawyer David Hadden argued that the case isn’t valid, because the patents don’t cover the world wide web, because IBM did not invent it. Does he have a case?
But here’s where my cry-baby theory comes back into play. Groupon’s lawyer, Hadden, is also accusing IBM of using the patents it owns in order to squeeze money out of other companies. And I don’t think he’s necessarily wrong. He also suggests that IBM “uses its huge stock of patents as a club to get money from other companies”. IP licensing is a high-margin business for the company, but it still makes up less than 2 % of its revenue. Yikes!
While I’m not suggesting it’s ok for Groupon to use this technology without paying, I do think that $167 million is a bit steep when Amazon and Facebook are paying a fraction of that. There’s also something to be said about Groupon’s tenacity when it comes to this particular fight. I’m not sure that Groupon will win, but their actions do suggest that they are ready to go the distance in order to make a point and as they attempt to win this battle. How this plays out remains to be seen, but the case will certainly set precedent.