Amidst bad times Groupon and IBM fight it out over 1990’s software patents


Groupon and IBM are at each others throat. In what may be define as a new kind of war, they have have sued each other over infringement of patents related to software usage. Whats surprising is that IBM has filed a case 2 months back related to a patent dispute of the 1990’s to which Groupon has filed a counter suit of such allegations being totally baseless and took at dig at IBM being once great but now fighting just to stay relevant.

Two months ago, IBM filed a lawsuit against the daily deals website Groupon that accused it of infringing on some of its patents related to software created before the Internet boom of the late 1990s. On Monday, Groupon hit back with a countersuit that said IBM had improperly used Groupon’s technology in some of its own software products.


In its lawsuit, Groupon took a swipe at IBM by describing it as a “relic of once-great 20th Century technology firms” that “has now resorted to usurping the intellectual property of companies born this millennium.”

A Groupon spokesperson followed up in an email that said: “Unfortunately, IBM is trying to shed its status as a dial-up-era dinosaur by infringing on the intellectual property rights of current technology companies, like Groupon. We look forward to having this matter considered.”

Groupon alleged that IBM’s WebSphere Commerce software, used by merchants for tracking sales and customer orders, improperly relies on its technology for using GPS and social networking data to provide personalized location-based deals. It is seeking royalties on what it described as “the billions of dollars in revenue that IBM has received based on its unlawful use of Groupon’s patented technology.”

In a statement to Fortune, IBM 0.03% called Groupon’s 2.43% counter suit “totally without merit.”

IBM’s complaint against Groupon is similar to other lawsuits it has filed against other online services like OpenTable and Priceline. The argument is that they built their technology based on patents related to the old-school telecommunications service Prodigy and that they have failed to pay for the appropriate licenses.

“Over the past three years, IBM has attempted to conclude a fair and reasonable patent license agreement with Groupon, and we are disappointed that Groupon is seeking to divert attention from its patent infringement by suing IBM,” said an IBM spokesperson. “Our intent is to reach a fair conclusion under which Groupon acknowledges its obligation and compensates IBM for the use of IBM’s patented technology.”

Both Groupon and IBM are facing tough times.