This article is more than 1 year old

IBM menaces Twitter IPO with patent infringement BOMBSHELL

Might Big Blue be a-hankerin' for some shares of the li'l blue birdie?

In the same SEC filing in which Twitter announced that it will boost its IPO share-price range to $23 to $25, up from $17 to $20, it also revealed a bit of news that may worry potential investors: a patent contretemps launched by IBM.

"We recently received a letter from International Business Machines Corporation, or IBM, alleging that we infringe on at least three US patents held by IBM, and inviting us to negotiate a business resolution of the allegations," the amended filing, signed by Twitter CEO Richard "Dick" Costolo, states.

The protected tech IBM named in the letter are US Patents numbers 6,957,224, "Efficient retrieval of uniform resource locators"; 7,072,849, "Method for presenting advertising in an interactive service"; and 7,099,862, "Programmatic discovery of common contacts".

We can only imagine how long it took for IBM's patent-infringement legal team – undoubtedly well-staffed though it may be – to sift through Big Blue's stash of approximately eleventy-squillion patents to uncover those three potential weapons.

Twitter is putting up a brave front. "Based upon our preliminary review of these patents, we believe we have meritorious defenses to IBM's allegations," the filing states – but it then carefully hedges that confidence by continuing, "although there can be no assurance that we will be successful in defending against these allegations or reaching a business resolution that is satisfactory to us."

In other words, it appears that Twitter is prepared to fight the allegations – maybe not in court, but at minimum in discussions with Big Blue. Interestingly, the letter from IBM was sent before Twitter's IPO homework was filed, which leads us to believe that some sort of stock deal might be part of the "business resolution" negotiations of which Twitter speaks.

It's not that Twitter was blindsided by IBM's move, however – although it's unknown if this specific claim by the corporate giant that last year was granted the most US patents for the 20th straight year was foreseen. As Twitter's filing notes, "We are currently, and expect to be in the future, party to intellectual property rights claims that are expensive and time consuming to defend, and, if resolved adversely, could have a significant impact on our business, financial condition or operating results."

As Twitter writes, "Companies in the internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets, and frequently enter into litigation based on allegations of infringement, misappropriation or other violations of intellectual property or other rights."

Twitter also warns potential investors in its IPO paperwork that it's not just legitimate companies with legitimate patents and legitimate cause for accusations of infringement that they need to worry about. "In addition," the filing states, "various 'non-practicing entities' that own patents and other intellectual property rights often attempt to aggressively assert claims in order to extract value from technology companies."

Yes, it's not just powerful patent-holding corporations such as IBM that Twitter needs to worry about. There are trolls in these parts, and more likely than not they'll force Twitter to cross their bridge when it comes to it. ®

More about

TIP US OFF

Send us news


Other stories you might like