No Groupons Available for Big Blue Patent Trial

Gaston Kroub

Nothing says summer in Wilmington, Delaware like a full-on patent trial. Especially when the trial involves two brand name companies -- in this case IBM and Groupon -- fighting more over principle than anything else. Sure, IBM has a big demand for over $150mm in damages sitting out there. What's really on trial, however, is IBM's insistence on extracting a toll from e-commerce providers, backed by its getting-creaky-with-age but extensive patent portfolio. And a company on the other side, Groupon, that doesn't feel like IBM's demands are justified.

So the companies and their lawyers get to enjoy a few weeks in downtown Wilmington's sweltering concrete confines. Unless they settle, we can expect that IBM will probably win, as do most patentees at trial. Where the damages end up is more of a guessing game, especially since Judge Stark (who is presiding over the trial) ruled that each side could put on their damages case. We now know that IBM's demand is a substantial one; whether the jury feels like awarding damages at that level may very much depend on IBM's ability to prove that other companies have paid significant licensing sums in the past for the asserted patents.

As with any patent case that goes to trial, there were many twists and turns in the case leading up to this week's showdown. Sure, the PTAB has gotten involved, with at least one IBM patent invalidated and on appeal. And the parties tried -- mostly unsuccessfully -- to win on summary judgment. Likewise, Groupon tried to argue that two of the asserted patents were ineligible under Alice. That didn't work either.

So what's the big story here? Again, it is that IBM's long-running licensing business is on trial. We can safely assume that IBM would have preferred not to have its historical licensing success and current difficulties on trial. In fact, IBM even moved in limine "to preclude reference, argument, evidence, or testimony concerning IBM's allegedly declining revenue or profits". But Judge Stark denied that request, reasoning that IBM could not have things both ways by telling the jury how great their licensing program is while being insulated from discussion of its business challenges as well. Furthermore, Judge Stark also ordered IBM to streamline its case before the jury by eliminating a number of asserted claims. Taken together, these orders make plain that while the focus of the dispute may be the actual patents considered by the jury, what's really on trial is the worth of IBM's broader portfolio.

Ultimately, the result here will be an important bellwether for IBM's investors to consider. In Groupon's view, IBM is the patent equivalent of an aging slugger getting by on reputation while still demanding a top pay. IBM, however, is arguing that it has pop in its proverbial patent bat. We should know soon whether this case will be a home run or strikeout for Big Blue...