IBM Wins $82.5 Million Award Against Groupon in Jury Verdict

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.”