IBM Accuses Twitter of #PatentInfringement

By: Kelly McIntosh

In the days leading up Twitter’s initial public offering (IPO) , a lawsuit was bound to arise.[1] IPO’s are “the first sale of stock by a private company to the public.”[2] The theory is that a company being sued and approaching their IPO date, would want “minimize risks” and possibly settle, which is great news for a claimant since a profit is almost guaranteed. [3]

On November 7, 2013, Twitter released stock to the public at $26 per share.[4] Only days prior, International Business Machines Corporation (IBM) accused Twitter of three patent infringements.[5] The first is the “efficient retrieval of uniform resource locators” patent.[6] This is what allows URLs to be shortened.[7] Second is a patent for how Twitter helps users find people to follow by using the person’s email contacts.[8] This patent is called the “programmatic discovery of common contacts.”[9] Lastly, is the patent of a “method for presenting advertising in an interactive service.”[10]

Patent infringement occurs when “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent.”[11] Patent infringement does not need to be intentional.[12]

When deciding whether a patent has been infringed upon, a court will take a two-step analysis: “First, the claim must be properly construed to determine its scope and meaning.[13] Second, the claim as properly construed must be compared to the accused device.”[14] The entity claiming patent infringement must prove by a preponderance of evidence that “the asserted claim is found in the accused product,” or that there is a substantial equivalency.[15] Substantial equivalency is found if a product “performs substantially the same function in substantially the same way to achieve substantially the same result.”[16]

IBM may have the upper hand in this battle because it is a much larger tech company than Twitter and it makes over one billion dollars yearly in patent licensing.[17]  This infringement attack from a major company may be a first for Twitter.[18] Also, Twitter admitted that it is not an expert in dealing with patent lawsuits.[19] In an amendment to its latest filing with the Securities and Exchange Commission (SEC), Twitter believes it has “meritorious defenses” to the claims being made by IBM, but that there is no assurance to stock holders that it will be successful in defending these claims.[20] Two of the patent infringement claims made by IBM look broad and “general,” while the other looks like it could be used to sue any “ad network,” including “Google or Facebook.”[21] Although Twitter has not talked about making a settlement and IBM has yet to file a lawsuit, IBM hopes to work out a “business resolution,” through negotiations.[22]

IBM’s closing comments to Twitter about an out of courtroom meeting and negotiations, make it seem like IBM is employing a common strategy used to make a profit by allowing Twitter to feel at risk. Twitter could get lucky this time because it looks like IBM doesn’t intend to take this all the way into a courtroom. But Twitter will need to become familiar with patent lawsuits as it allegedly has new technology that it will be releasing in the near future.[23]