Groupon plays defense with group-buying competitors

Not long after Groupon was battered by a string of patent infringement lawsuits — including a 2010 action by Mobgob LLC in Los Angeles – the coupon website started investing in patents. Intellectual property experts believe Groupon is following the defensive path other companies take to protect itself from costly, future litigation.

An armory of so-called defensive patents strengthens a company’s position in case of a legal assault for infringement. A hefty patent collection can encourage plaintiffs to settle out of court, saving litigants time and money.

Licensing agreements are frequently part of settlement terms in patent disputes. Having plenty of defensive patents also bolsters chances for a company to countersue for patent infringement.

In some cases, potential lawsuits are thwarted by the sheer quantity of patents in a company’s portfolio. That may have been Google’s intention when it snapped up more than 17,000 patents from Motorola Mobility LLC. Google’s ever-expanding portfolio overwhelms Groupon’s mere 25 patents.

Business analysts say Groupon’s steady increase of patent possessions is a positive sign. The half dozen patents Groupon secured last year — two of which were directly related to Internet group purchase ideas — were highly rated in a review for influential Crain Communications.

Other patents owned by Groupon deal with flexible merchant pricing and customer buying preferences, tools which competitors would find valuable. Portfolio expansion is planned. Thirteen additional Groupon patents are under consideration by the U.S. Patent and Trademark Office.

Patent lawsuits are taken seriously because of the effort and money that litigation can sap from a business. Consumer confidence in a company brand is also at stake. Patent lawsuit losses weaken business reputations and may make companies vulnerable to other legal actions.

The interpretations of offensive and defensive patents vary among business experts and analysts. To obtain a clear idea about patent strategies, businesses turn to intellectual property attorneys, who understand the legal advantages and pitfalls of patent ownership.

Source: chicagobusiness.com, “How Groupon bought its way to patent prominence” John Pletz, Apr. 29, 2013