Sometimes, the only appropriate way to respond to a lawsuit is by filing a countersuit. At least, that seems to be the philosophy of Groupon, Inc. The story began a few months ago when International Business Machines, better known as IBM, filed a lawsuit against Groupon. IBM claimed that Groupon, which is an e-commerce marketplace that connects subscribers with merchants in their local area, infringed four of its patents.
IBM claimed that at least two patents that are related to its late-1980s telecommunications service Prodigy are clearly infringed by the technology upon which Groupon bases its services. In their complaint, IBM asserts that they deserve compensation from Groupon for the newer company’s use of IBM’s patented technology. An IBM spokesperson notes, “Over the past three years, IBM has attempted to conclude a fair and reasonable patent license agreement with Groupon.” Frustrated in these efforts, IBM filed a lawsuit in Delaware where the company is organized.
Groupon chose to file a countersuit in Illinois, where it has its home base in Chicago. Among other charges in the complaint, Groupon skewers IBM as a “relic of once-great 20th Century technology firms.” Moreover, Groupon asserts that the technology giant “has now resorted to usurping the intellectual property of companies born this millennium.” A spokesperson from Groupon said in an emailed statement to journalists that: “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.”
Groupon alleges in its countersuit that IBM actually infringes its patented technology with its WebSphere Commerce software. Merchants can use WebSphere to track customer orders and sales as well as offer special deals and pricing based on the customer’s current geographic location. Groupon insists that much of this technology has already been patented by them, which entitles them to royalties from the “billions of dollars in revenue that IBM has received” from their unfair use of Groupon’s technology.
The outcome of these cases remains pending, but the situation highlights the need to protect intellectual property and perform appropriate due diligence before developing new technology.