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Groupon loses $83 million patent dispute with IBM

The jury verdict is a blow for local-deals marketplace, whose stock now hovers in the $5 range.

Groupon loses $83 million patent dispute with IBM
[Photo: Flickr user Brent Payne]

A patent dispute between IBM and Groupon has ended badly for the local deals company. On Friday, a Delaware jury awarded IBM $83 million in damages for what it viewed as willful patent infringement on the part of Groupon, according to Reuters.

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The trial put to the test IBM’s aggressive patent strategy, worth upwards of $1 billion a year in licensing revenue. Patents have become a valuable weapon for tech titans, which spend heavily on R&D, and then use patented IP to extract fees from rivals large and small.

In final arguments, Groupon described IBM’s strategy as tantamount to “extortion.” Two of the four patents the deals company is accused of violating originated in the 1980s, long before Groupon’s particular brand of flash-sale e-commerce came into fashion.

The final bill for Groupon could soar even higher; IBM, which sought $167 million in damages, has the right to request that a judge increase the jury-approved payout.

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In the first quarter of 2018, Groupon posted an adjusted EBITDA of $52.6 million. Its shares are currently trading around $5.

“We will certainly explore the options available to us once we have had a chance to further consider the issues,” Groupon spokesperson Bill Roberts said in a statement, leaving open the possibility of an appeal.

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About the author

Senior Writer Ainsley Harris joined Fast Company in 2014. Follow her on Twitter at @ainsleyoc.

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