IBM Sues Rakuten for Infringement of E-Commerce Patents

On Monday, International Business Machines Corporation (IBM) filed a complaint in the District of Delaware against Rakuten Inc., Rakuten USA Inc., Rakuten Commerce LLC, and Ebates Inc. doing business as Rakuten for patent infringement, alleging that the defendants infringed its patents related to e-commerce. Rakuten is an e-commerce website that “connects consumers wishing to make purchases of products with providers of those products.”

IBM said that it partnered with others to launch Prodigy, one of the first e-commerce services, before Rakuten was founded in 1997. According to the complaint, Rakuten “took those prior innovations made by IBM and others to create and run its new business,” and used more of IBM’s innovations as it developed.  

IBM asserted that for approximately six years, it has tried to negotiate with Rakuten’s alleged unlicensed use of IBM’s patents to no avail. IBM argued that unlike Amazon, Apple, Google, and Facebook who have cross licenses with IBM, “Rakuten has chosen to willfully infringe IBM’s patents and even expand its infringing activity.” Reportedly, Rakuten has employed a “series of delay tactics,” such as not taking responsibility for its subsidiaries’ infringement or refusing to meet with IBM and ignoring its messages. IBM also stated that Rakuten “refused to explain why it continued to infringe IBM’s patents” and then purportedly “raised objectionable excuses for why it refused to negotiate.”

The patents-in-suit are United States Patent Nos. 7,072,849 (the ’849 patent); 7,631,346 (the ’346 patent); 6,785,676 (the ’676 patent); and 7,543,234 (the ’234 patent).

IBM said that it “invented methods for presenting applications and advertisements in an interactive service while developing the Prodigy online service,” which, according to IBM, was “a forerunner to today’s Internet.” 

For example, with the ’849 patent, IBM purportedly “sought to develop more efficient methods of communication that would improve the speed and functionality of interactive applications and reduce equipment capital and operating costs.” The ’346 patent reportedly “improves the single-sign-on technology” by developing “methods for systems interacting within a ‘federated computing environment’ to trigger a single-sign-on operation on behalf of a user that would obtain access to a ‘protected resource’ and create an account for the user.” According to IBM, the ’676 patent relates to “methods for improving searching using real-time incorporation of contextual information” and the ’234 patent relates to “methods and systems for stacking portlets in portal pages.”

IBM averred that Rakuten “became a major e-commerce company by using IBM’s patented invention.” In particular, IBM argued that Rakuten’s website and mobile applications use the patented technology “to provide cash back offers” on products. For example, Rakuten allegedly infringes the ‘849 patent by “presenting advertising obtained from a computer network (such as the Internet), the network including a multiplicity of user reception systems (such as the computers or mobile devices of Rakuten’s customers) at which respective users can request applications (such as Rakuten’s webpage), from the network, that include interactive services (such as cash back offers), the respective reception systems including a monitor (such as a computer monitor or mobile screen …) at which at least the visual portion of the applications can be presented as one or more screens of display.” 

Specifically, IBM alleged that the way Rakuten structures its application, webpage, and advertising, and selectively stores its advertising in order to provide its cash back feature uses technology protected in the ‘849 patent by IBM.  Rakuten was accused of direct, indirect, and contributory infringement of the patents. IBM seeks declaratory and injunctive relief and an award for damages, costs, and fees.

IBM is represented by Potter Anderson & Corroon LLP and Desmarais LLP.