Twitter Paid $36M For IBM Patents To Avoid Suits

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Twitter Inc (NYSE:TWTR) has shelled out $36 million to buy 900 patents from International Business Machines Corp. (NYSE:IBM), according to a filing yesterday. Both the parties reached the agreement back in December, and announced it publicly in January, not revealing the financial deals. The agreement also settles the scores between IBM and Twitter, where IBM complained to the micro blogging site about infringements of its three patents.

Twitter patent portfolio rising

In the filing, Twitter Inc (NYSE:TWTR) said it has a total of 956 patents, and has filed about 100 patent applications. Back in December, before the issue of IPO it only has 9 patents in its kitty, and was often questioned under intellectual property disputes. The agreement with IBM was Twitter’s first patent technology deal.

In the filing, Twitter Inc (NYSE:TWTR) said that the company is dealing with a number of intellectual property lawsuits, and “as we face increasing competition and gain an increasingly high profile,” it is expecting growth in the number of patents and other intellectual property claims in the future.

“This acquisition of patents from IBM and licensing agreement provides us with greater intellectual property protection and gives us freedom of action to innovate on behalf of all those who use our service,” said Ben Lee, legal Director for Twitter in a statement, in January.

There was no word from either whether the three patents were included in the 900 patents that Twitter acquired. Twitter Inc (NYSE:TWTR) might have purchased these patents to utilize the software technologies into its website.

IBM, the topmost patent holder

Twitter Inc (NYSE:TWTR)’s interest in IBM is not unique and unexpected considering the huge patents portfolio of the latter. Before Twitter, companies like Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG) also purchased patents from IBM.

IBM has been acquiring patents at rapid speed. Last year, the company was at the top receiving 6,809 patents over innovations like Watson artificial intelligence and cloud-computing innovations. For 21 straight years, IBM has been granted the most U.S. patents. Samsung received 4,676 patents last year, making it No. 2.

The stock of the micro blogging site added less than 1% to $54.83 at yesterday’s close in New York.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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