Groupon Accuses IBM of Infringing Patent

CHICAGO (CN) — Groupon says IBM's WebSphere e-commerce platform infringes on its patent for correlating GPS location information with user interests.

Groupon, the online provider of daily deals, called IBM a "relic of once-great 20th Century technology firms," that has "now resorted to usurping the intellectual property of companies born in this millennium," in a patent suit filed Monday.

"The convergence of connected mobile devices, social networks and location based services (dubbed 'SoLoMo') is a defining feature of commerce in today's economy," the complaint states. "Groupon pioneered these Social-Local-Mobile services and holds valuable patent rights protecting its technology."

IBM belatedly recognized the value of SoLoMo technology, Groupon claims, and rushed to add such features to its WebSpere Commerce Suite, an e-commerce platform that integrates marketing, sales, and order processing in one package.

But in doing so, "it unlawfully used Groupon's technology and infringed Groupon's intellectual property. IBM subsequently reaped millions of dollars in revenue from sales of its enhanced WebSphere software that bolstered its floundering business," according to the complaint.

The specific patent IBM is accused of infringing is titled "System for Providing a Service to Venues where People Aggregate." It uses algorithms to correlate individual GPS data with user interests and demographics, as well as merchant locations and incentive offers.

Groupon's claim that IBM is a mere "relic" is somewhat ironic given that Groupon has performed atrociously since its initial public offering. It now trades a $3.57 per share, a mere fraction of its 2011 IPO price of $26.11, which it has never surpassed.

Meanwhile, IBM remains one of the largest corporations in the world and a member of the S&P 500, with revenues of $81 billion last year.

Groupon is represented by Thomas Duston with Marshall, Gerstein & Borun in Chicago, with of counel David Hadden with Fenwick & West in Mountain View, California.

IBM did not immediately respond to a request for comment.

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