IBM Wins $82.5 Million Award Against Groupon in Jury Verdict

By Steve Brachmann
August 2, 2018

On July 27th, a jury verdict entered into the District of Delaware awarded $82.5 million in reasonable royalties to information technology giant IBM after that company asserted a series of patents against e-commerce marketplace provider Groupon. The jury determined that Groupon infringed on a series of four patents asserted by IBM, including:

  • U.S. Patent No. 5796967, titled Method for Presenting Applications in an Interactive Service. Issued in August 1998, it covers a method for presenting interactive applications on a computer network including a multiplicity of user reception systems, the method involving generating a screen display at a reception system for a requested application, generating a first partition for presenting applications, and presenting a second partition for presenting command functions permitting movement between applications.
  • U.S. Patent No. 5961601, titled Preserving State Information in a Continuing Conversation Between a Client and Server Networked Via a Stateless Protocol. Issued in October 1999, it claims a computerized method for preserving state information in a conversation between a client adapted to request services from servers networked via a stateless protocol to a client in a way that preserves state information while a user browses HTML files, for example to enable a business transaction.
  • U.S. Patent No. 7072849, titled Method for Presenting Advertising in an Interactive Service. Issued in July 2006, it claims a method for presenting advertising obtained from a computer network by structuring applications so that they are presented at a first portion of a screen, structuring advertising to be presented at a second portion of a screen and selectively storing advertising objects at a store established at the reception system.
  • U.S. Patent No. 7631346, titled Method and System for a Runtime User Account Creation Operation Within a Single-Sign-On Process in a Federated Computing Environment. Issued in December 2009, it discloses a method for managing user authentication within a distributed data processing system to improve comprehensive single-sign-on experiences to users within a federated computing environment that involves a loosely coupled affiliation of enterprises.

IBM had asserted these patents in a complaint filed against Groupon in March 2016, in which IBM alleged that Groupon had built its business by infringing upon the asserted patents-in-suit. IBM had accused Groupon of using the covered technology on its websites and its mobile applications to implement online local commerce marketplaces connecting merchants to consumers by offering goods and services at a discount. IBM alleged that it had attempted to conduct licensing conversations with Groupon for three years prior to filing the litigation in Delaware.

In the recent jury verdict, the Delaware jury found not only that Groupon infringed upon all four patents asserted by IBM but also that Groupon’s infringement of each of the patents had been willful. The jury also found that Groupon did not prove invalidity of either the ‘601 or the ‘346 patents and also found against Groupon’s arguments that it either had an implied license to practice the ‘346 patent or that IBM had exhausted its rights to assert that patent based upon IBM’s licenses to Facebook and Google.

Asked for a comment on the recent vindication via jury verdict, Desmarais LLP, the firm representing plaintiff IBM in this case, directed us to this article published by IAM and written by Richard Lloyd where founding partner John Desmarais was quoted as saying:

“With all of the patent reform and the negative PR that patent owners have been getting I think there has been a realisation that things have shifted too far in the direction of infringers; I do think the pendulum is swinging back.”

Groupon also offered an official statement on the $82.5 million reasonable royalty verdict through one of the company’s communications officials:

“We continue to believe that we do not infringe on any valid IBM patents. To the extent these patents have any value at all — which we believe they do not — the value is far less than what the jury awarded, to say nothing of IBM’s demand for $167 million. We will certainly explore the options available to us once we have had a chance to further consider the issues, including post-trial motions and appeal. We continue to believe in the strength of our case and will continue to assert it in the courts. We also look forward to continuing our own infringement suit against IBM, currently pending in Illinois.”

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 4 Comments comments.

  1. Tiburon August 2, 2018 5:08 pm

    “IBM had accused Groupon of using the covered technology on its websites and its mobile applications to implement online local commerce marketplaces connecting merchants to consumers by offering goods and services at a discount.”

    Let’s see, IBM with all their might and existing customer relationships, etc couldn’t come to market with a product or service and create what a small upstart Groupon did:

    “online local commerce marketplaces connecting merchants to consumers by offering goods and services at a discount”

    Instead, IBM relied on leeching and being parasites to the corporation (Groupon) that *DID* innovate and create an entirely new market.

    $82 million for 4 pieces of paper from a large corporation that didn’t bring anything to customers or consumers to use. Just pieces of paper – no software, no hardware, no website, no apps – just pieces of paper. Nothing anyone can use or do anything with. How is this “promoting science” as The Founders intended? How is the lining the pockets of law firms over the scientists or engineers promoting science or engineering? because that’s what happened with the $82million from the scientists and engineers of Groupon to the legal team of IBM.

    Patents are used by big parasitic bullies against small/smaller software innovators.

    Shame shame.

  2. Yt wade August 4, 2018 3:50 pm

    Interesting Groupon response to the verdict. They believe the patents have ‘no value.’. However, their opinion in opposition to the jury and the law is immaterial. The US patent office did award patents , and the egotists behind Groupon’s jeuvenile response and their disregard for the law got them their just rewards.

  3. Eugene August 15, 2018 1:10 am

    sad to see IBM unable to innovate for decades, reduced to being a patent troll ..

  4. Gene Quinn August 15, 2018 8:51 am

    Eugene @3-

    Obviously, an ignorant comment.

    First, IBM is not a patent troll. Enforcing rights granted by the federal government does not make one a patent troll. IBM is no more a patent troll then you would be an automobile troll for preventing someone from unauthorized use of your vehicle. Please wise up.

    Second, perhaps you’ve heard of Watson? It is absolutely revolutionary.

    Next time you are inclined to make a comment that demonstrates you are unfamiliar with the topic you might want to choose to remain silent.

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