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Twitter Inc., the microblogging service that went public last year, agreed to buy 900 patents from International Business Machines Corp. (IBM) to gain access to new technology and build a defense against infringement suits.
Financial terms weren’t disclosed. The agreement, signed last month and announced today, also resolves a dispute that prompted IBM to write to Twitter last year about possible infringement of at least three patents.
The purchase “provides us with greater intellectual property protection and gives us freedom of action to innovate on behalf of all those who use our service,” Ben Lee, legal director for Twitter, said in a statement.
Twitter had nine patents and 95 pending applications before its initial public offering in November, far fewer than other leading technology companies. The company said in a regulatory filing that could make it a target for litigation and limit its ability to fight back by asserting its own patents.
“They weren’t facing a lot but it’s an increasing distraction” for technology companies, said Richard Doherty, research director of Envisioneering Group, a technology assessment consultancy in Seaford, New York. “At some point it becomes just a balancing function to take advantage of warehouses of intellectual property, like at IBM.”
Video Delivery
In its letter to Twitter, IBM cited patents relating to a networking technique based on common contacts, a way to show advertisements without interfering with an interactive site, and using interconnected computers to reduce Web traffic. The San Francisco-based company also will probably gain IBM inventions related to things like video compression, Doherty said.
“As Twitter expands and starts delivering video, they need to increase their intellectual property portfolio,” he said. “We believe some know-how is going along with the patent transfer, not just patent numbers.”
The patents include ones that directly relate to Twitter’s business plan. One covers a way to enable compliance with international shipping requirements. Twitter is seeking to get more revenue from retailers and is trying to make it easier for users to shop via its 140-character messages.
Another of the patents is for improved messaging, according to information posted on the U.S. Patent and Trademark Office website.
Others are less clearly connected, such as those a way to prevent damage to semiconductor chips.
IBM Deals
IBM, which has received the most U.S. patents for the past 21 years, has made deals with patent-light technology companies before. The Armonk, New York-based company has sold patents to Google Inc. to aid the Android software maker’s battle over smartphone technology. A sale of 750 patents to Facebook Inc. helped the social-networking site settle a lawsuit with Yahoo! Inc.
“It illustrates the value of patented IBM inventions and demonstrates our commitment to openly licensing access to our broad patent portfolio,” Ken King, general manager of intellectual property for IBM, said in a statement. “We look forward to a productive relationship with Twitter in the future.”
The licensing and sales deals mean IBM has agreements with almost every technology company in business. Its patents generate approximately $1 billion a year in licensing revenue, about 1 percent of its sales last year.
(Source: Bloomberg)
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