Twitter Paid $36 Million for IBM Patents to Avoid Suits

Twitter Inc. (TWTR), the microblogging service that held an initial public offering last year, paid $36 million to acquire 900 patents from International Business Machines Corp. (IBM), according to a filing.

The agreement, which was was signed in December and announced in January without financial details, resolved a dispute that prompted IBM to write to Twitter about possible infringement of at least three patents.

Twitter now has 956 patents and about 100 filed patent applications in the U.S., it said in the filing yesterday with the U.S. Securities and Exchange Commission. Before its November IPO, Twitter held only nine patents, making it a target for intellectual-property disputes. The deal with IBM was Twitter’s first for patent technology, not counting intellectual property gained by buying other companies. IBM has been granted the most U.S. patents of any company for 21 straight years.

“We presently are involved in a number of intellectual property lawsuits, and as we face increasing competition and gain an increasingly high profile, we expect the number of patent and other intellectual property claims against us to grow,” Twitter said in the filing.

The shares of San Francisco-based Twitter gained less than 1 percent to $54.83 at yesterday’s close in New York. The stock has more than doubled since the company sold shares to the public at $26 each on Nov. 6.

To contact the reporter on this story: Sarah Frier in San Francisco at sfrier1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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