Shares of Groupon Inc GRPN gained more than 3 percent Monday after the mobile and online marketplace company reached a settlement in patent litigation with IBM IBM and struck a new patent cross-license agreement with Big Blue.
What Happened
Groupon was accused by IBM of using patented technology that is typically licensed to e-commerce giants for $20 to $50 million, Reuters reported. The company said Groupon is akin to the "new kid on the block" who refuses to "take responsibility for using these inventions."
In response, Groupon argued the patents "cover the world wide web," which IBM did "not invent."
Groupon will pay IBM $57 million and acquire the rights to use IBM's patent portfolio in its technologies, the press release said.
Why It's Important
Groupon's $57-million fee validates "the value of our intellectual property," IBM's general manager of IP Dr. William Lafontaine said in the press release. On its end, Groupon's ability to use IBM's patents will allow it to continue building "amazing products for consumers and small businesses around the world," the company said.
What's Next
The agreement calls for the two companies to explore making some of Groupon's offerings exclusive to IBM and its employees as part of a corporate benefits offer.
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Analyst Likes Groupon's Stock, With Or Without An Acquisition
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