In addition to the coronavirus outbreak and the delay of its initial public offering, Airbnb’s troubles now include a new patent infringement suit. Last Wednesday, March 11, IBM brought suit in the United States District Court of Delaware, asserting several patents in its portfolio and seeking damages as well as an injunction barring Airbnb from using these patents.
Thes patents at issue are used primarily in e-commerce—and some of them date back to the time of dial-up technologies such as Prodigy. The patents, that are apparently being asserted, involve software process claims that allegedly cover a variety of Airbnb’s site’s functions, including advertising, navigation, reception, and temporary data storage.
This is not the best news for Airbnb because, in addition to the timing, IBM has had significant success in the past in asserting its patents against other platforms. For instance IBM filed a similar suit against Groupon, winning a $83 million jury verdict, which resulted in a final settlement of $57 million, reached October 2018. It has also enjoyed similar success against Twitter in 2014. It also brought suit against Amazon on 2006 and more recently against Expedia. On the other hand, in June 2019 Priceline prevailed over IBM in a patent case appealed to the U.S. Court of Appeals for the Federal Circuit.
The AirBnB lawsuit speaks to the power IBM’s patent portfolio and its vigorous enforcement. IBM has cross-license agreements in place with major players in e-commerce such as Apple and Amazon. Not surprisingly, it was Airbnb’s failure to come to licensing terms, after many years in negotiation, that led to the current suit. In recent years, licensing revenue and royalties has produced for IBM well over a billion dollars per annum in revenue.