IBM takes Airbnb to court over historic patents –
https://www.ft.com/content/6f02ce76-e1d6-45d8-b27a-0491281c2507
IBM is taking Airbnb to court over what it claims is the illegal use of four patents — the latest in a string of suits against online companies involving historic and arguably broad innovations — in a move that threatens to cast a shadow over the short-term rental company’s road to a proposed IPO.
The computing giant has accused Airbnb of “building its business” by using patents relating to functions such as “presenting advertising in an interactive service” and “improved navigation using bookmarks”.
“After almost six years of unsuccessful discussions with Airbnb to reach a fair and reasonable patent licence agreement, we had no alternative but to file legal action to protect our intellectual property rights,” IBM said.
“Airbnb has chosen to ignore our patents and use our technology without compensation.”
Airbnb said of the claims: “We believe this case does not have any merit and look forward to an outcome which vindicates this position.”
IBM has topped the list of US companies awarded the most patents every year for the past 27 years. It has used this portfolio to launch a number of legal actions against tech companies over the past decade.
In several cases, including in this latest suit, IBM has cited US patent 7,072,849. First developed in 1988 as part of “Prodigy”, a service IBM described in court filings as a “forerunner to today’s internet”, the patent covers innovations such as “presenting advertising concurrently with service applications at the user terminal configured as a reception system”.
In its filing, IBM argued that rooms and experiences on Airbnb should be considered “service applications”, while the “reception system” should refer to the device being used to access the website.
IBM used the same patent as part of a dispute with coupon site Groupon, which in 2018 agreed to pay $57m to bring to an end a bruising two-year court battle.
The patent was also part of a suit filed in 2013 against Twitter, a then-emerging social network, which also struck a deal, licensing disputed patents from IBM, and also acquiring 900 more — at a total cost of $36m.
Twitter was readying its IPO when IBM sued, forcing the company to warn prospective investors about the impending litigation in its risk factors. Airbnb finds itself in a similar position: the company has stated that it plans to go public this year, though fears over the coronavirus have led to speculation it may be delayed. Nevertheless, IBM’s timing is unlikely to be a coincidence, argued UC Hastings law professor Robin Feldman.
“The moment of an IPO is a perfect time for putting pressure on a company to settle quickly,” said Prof Feldman. “That also applies in the first year after the IPO is completed. The company’s stock may be more vulnerable to swing.”
In a 2015 paper, published in the Stanford Technology Law Review, Prof Feldman and a colleague found that of 52 US companies surveyed, 40 per cent reported receiving patent demands in the run-up to, or just after, going public.
“An IPO is a watershed moment for a young company, and patent infringement litigation can spoil the celebration,” said Prof Feldman.
IBM pushed back against any suggestion it was behaving in the manner of a “patent troll”. The pejorative term is used by critics to describe the use of overly broad patents as a way of pressuring companies into begrudgingly paying licence fees to avoid a long and expensive legal fight.
“Patent trolls are businesses that acquire patents from third parties and then try to make money off them through licensing or suing accused infringers,” IBM said. “IBM patents are homegrown and result from our more than $5bn investment a year in research and development. We are determined to protect that investment and our innovation leadership.”