IBM Sues Priceline, Kayak Over Royalties for Late ’90s Patents

IBM is suing Priceline Group Inc. and its subsidiaries, travel website Kayak and restaurant-reservation tool Opentable, after failing to reach a patent-licensing agreement.

International Business Machines Corp. said the Priceline companies aren’t paying royalties to use two patents issued in the late 1990s that were the result of development of the Prodigy online service, one of the earliest means for the public to access the Internet. Two other patents issued in 2006 and 2009 were also infringed, IBM said in a complaint filed Monday in a district court in Wilmington, Delaware.

“Despite IBM’s repeated demands, Priceline refuses to negotiate a license,” said Armonk, New York-based IBM. The company said it informed Priceline of the patent infringement in 2011. Leslie Cafferty, a spokeswoman for Priceline, declined to comment.

As one of the largest holders of patents in the world, IBM rarely has to flex its muscles in court and expose its patents to legal scrutiny. The last time it did, a U.S. trade agency rejected claims that Asustek Computer Inc.’s motherboards were using IBM technologies, and IBM lost its bid to ban U.S. imports of computer motherboards and graphics cards made by the firm. The companies later settled.

While IBM has amassed the most U.S. patents for 22 straight years, the company has to prove it can turn new inventions into revenue. Sales at the technology giant have fallen for three straight years as new offerings like cloud computing and data analytics haven’t grown fast enough to replace revenue lost from divestitures and weakened demand for the company’s hardware and services.

Last year, Twitter Inc. agreed to buy 900 patents from IBM for an undisclosed amount to resolve a dispute that prompted IBM to write to the microblogging company about possible infringement of at least three patents.

The case is International Business Machines v. Priceline, 15-cv-00137, U.S. District Court, District of Delaware (Wilmington).

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE