IBM has a long history of getting paid for its patents. When its $1 billion licensing juggernaut hits the occasional bump in the road, it often results in a high-profile lawsuit.
That happened this week, when IBM filed a patent suit (PDF) against Priceline, as well as Kayak and OpenTable, two companies Priceline purchased in recent years. The complaint says that despite IBM's "repeated demands," Priceline refused to buy a patent license.
"Priceline has built its business model on the use of IBM’s patents," write IBM lawyers.
That statement is based on patents that stretch back to the days of Prodigy, an online service cofounded by IBM that predates the World Wide Web.
IBM has asserted that four patents are infringed by Priceline, including patents 5,796,967 and 7,072,849, the ones said to relate to Prodigy. They describe a system of showing applications and ads that relied more on user computers, reducing load on Prodigy servers. In the complaint, IBM lawyers write:
The inventors recognized that if applications were structured to be comprised of “objects” of data and program code capable of being processed by a user’s PC, the Prodigy system would be more efficient than conventional systems... Applications could then be composed on the fly from objects stored locally on the PC, reducing reliance on Prodigy’s server and network resources.
The efficiencies also allowed Prodigy to quickly grow its user base... The technological innovations embodied in these patent persist to this day and are fundamental to the efficient communication of Internet content.
The 5,961,601 patent describes preserving "state" information between a client and server. US Patent No. 7,631,346 describes advances in single sign-on technology that allows users to use a single account, according to the complaint.
IBM has a long history of using early Internet patents to get payments from today's Internet companies. In 2006, the company sued Amazon (PDF) for infringing three patents, including a 1994 "electronic catalog." The case settled several months later.
In 2013, just before its IPO, Twitter received a patent threat from IBM and ultimately paid $36 million to license Big Blue's patents.
In the case against Priceline, IBM is represented by John Desmarais, who has a noted history in the patent world. Desmarais left a lucrative corporate practice to personally purchase more than 4,000 patents from Micron. Desmarais has used those patents to file dozens of lawsuits related to RFID technology against Macy's, the Gap, JC Penney, and others.
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