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IBM Sues Priceline, OpenTable, Kayak Over E-Commerce Patents

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By Mark Wilson, Esq. on February 12, 2015 12:48 PM

William Shatner will have to start negotiating some lower prices on lawyers. Inside Counsel reports that IBM has filed a lawsuit against Priceline, OpenTable, and Kayak for infringing on four of IBM's patents. (Priceline recently acquired both OpenTable and Kayak.)

Believe it nor not, two of the patents at issue go back to something completely unrelated: the pre-Internet online service Prodigy, which started in the late 80s and died quietly in 1999.

Carmen Sandiego Was on Prodigy the Whole Time

Prodigy was a pre-Internet online service with its own proprietary content, back in the halcyon days of America Online (when it was called that) and CompuServe. It began as a collaboration between IBM and Sears.

Before the use of modern Internet protocols, IBM invented a new way to quickly present content to users that cut down on the use of network resources by having the client computer, rather than the server, render images and process data (remember, this was back in the time of the 14.4 kbps modem, which is at least 1,000 times slower than your Internet connection now).

Another patent handled the way advertising was inserted into content presented to the user, and a third patent allowed a website to save the state of a customer's transactions and resume later.

An Offer You Can Refuse, Apparently

IBM claims that Priceline uses this technology on its website, and, indeed, also claims that it sent Priceline a letter in 2011 to let it know that. According to the complaint, which was filed earlier this week in federal court in Delaware, IBM made repeated attempts to negotiate a licensing agreement, but "Priceline has refused to engage in any meaningful discussion on the merits, resorting instead to delay and non-responsive answers."

While Priceline has remained quiet, IBM has been vocal that it really doesn't want to sue; it would much rather license the technology, as it did with Amazon in 2006 and Twitter in 2013. Patent licensing is part of its revenue stream. A source told CBS MoneyWatch that "the suit is part of a stepped up initiative within IBM to boost revenue by enforcing its patents."

MoneyWatch also speculated that the suit took so long to come to fruition because IBM just has too many patents to keep track of, which can happen when you have 43,000 of them. Policing all this intellectual property poses a concern for the legal department, which not only has to fight existing patent infringement, but also has to find a way to proactively discover who else might be infringing on a patent. If IBM can invent a computer that can beat Ken Jennings at "Jeopardy!," it will probably invent a way to ferret out the infringers, too.

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