Saturday, February 1, 2014

Twitter's New Patent Strategy

In IBM's Complaint to Twitter Leads to Patent Purchase, Susan Decker reports Twitter settled a dispute over three patents with IBM, signed a cross-license, and agreed to purchase 900 IBM patents. Twitter says it will "gain access to new technology and build a defense against infringements suit."

In a world that prizes massive patent portfolio's Twitter had just nine patents and 95 applications. Twitter danced around the issue by seeking to get the industry to transfer control of patents to employee-inventors to put an end to the patent war, but not much happened. I don't think people wanted to give up their patent rights. See Twitter Innovator's Patent Agreement - Unlikely Adoption. Anyway, Twitter has a new patent strategy.

Would Twitter have done better to pursue a strong patent position going into the IPO? It is impossible to know and it may not matter since Twitter stock has remarkably increased from $44.90 at IPO to $64.50 on January 31, resulting in a market capitalization of $35.8 billion. Twitter doesn't need to seek its own patents to catch up, it can purchase 900 IBM patents. IBM knows how to make patents available when you "need" them. See Facebook Buys 750 IBM Patents - Call to Arms. Time will tell how much the IBM patents relate to Twitter, but some appear to be tangential (e.g., protecting semiconductor chips from damage). One thing appears to be certain on this confidential agreement Twitter has joined the ranks of companies owning NPE patents.

Thanks to Alan Snyder for passing the above article and the one below my way!

Updated on March 7: Twitter Paid $36 Million for IBM Patents, which = $34,000 per patent or application when you ignore the nine patents Twitter owned in the cross-licensing transaction.

Copyright © 2014 Robert Moll. All rights reserved.