IBM sues Groupon for infringing its patents, including from Prodigy online service

Claims Groupon used the technology for online local commerce marketplaces

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IBM headquarters in Armonk, NY

Credit: IBM

IBM has sued online deals marketplace Groupon for infringing four of its patents, including two that emerged from Prodigy, the online service launched by IBM and partners ahead of the World Wide Web.

Groupon has built its business model on the use of IBM’s patents, according to the complaint filed Wednesday in the federal court for the District of Delaware. “Despite IBM’s repeated attempts to negotiate, Groupon refuses to take a license, but continues to use IBM’s property,” according to the computing giant, which is asking the court to order Groupon to halt further infringement and pay damages.

IBM alleges that websites under Groupon’s control and its mobile applications use the technology claimed by the patents-in-suit for online local commerce marketplaces to connect merchants to consumers by offering goods and services at a discount.

About a year ago, IBM filed a similar lawsuit around the same patents against online travel company Priceline and three subsidiaries.

To develop the Prodigy online service that IBM launched with partners in the 1980s, the inventors of U.S. patents 5,796,967 and 7,072,849 developed new methods for presenting applications and advertisements in an interactive service that would take advantage of the computing power of each user’s PC and reduce demand on host servers, such as those used by Prodigy, IBM said in its complaint against Groupon.

“The inventors recognized that if applications were structured to be comprised of 'objects' of data and program code capable of being processed by a user’s PC, the Prodigy system would be more efficient than conventional systems,” it added.

Groupon is also accused of infringing U.S. Patent No. 5,961,601, which was developed to find a better way of preserving state information in Internet communications, such as between an online merchant and a customer, according to IBM. Online merchants can use the state information to keep track of a client’s product and service selections while the client is shopping and then use that information when the client decides to make a purchase, something that stateless Internet communications protocols like HTTP cannot offer, it added.

The online marketer has also been charged with infringing U.S. Patent No. 7,631,346 for a single-sign on process in a federated computer environment, which would, for example, allow users to sign into Groupon using their Facebook account.

Groupon could not be immediately reached for comment on the suit.

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