Twitter Inc., the microblogging service, paid $36 million to acquire nearly 1000 patents from International Business Machines Corp., to escape a legal fight, according to a filing. A note about the patent acquisition, which was part of a $38.5m expense the company logged as “intangible assets” was included in Twitter’s annual 10-K filing with the US Securities and Exchange Commission (SEC).
The deal involves 900 patents, and settles a dispute of Twitter potentially infringing on at least three of IBM’s patents, which emerged in February this year. The price breaks down to roughly $40,000 per IBM patent. The full-year revenue of the tweet biz’s to December 31 was $664.89m (it registered a $645m net loss over the 12-month period due to an IPO-related charge), five per cent of the year’s sales was spent on this patent deal.
“Companies in the Internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets, and frequently enter into litigation based on allegations of infringement, misappropriation or other violations of intellectual property or other rights,” Twitter said in the filing. “Many companies in these industries, including many of our competitors, have substantially larger patent and intellectual property portfolios than we do, which could make us a target for litigation as we may not be able to assert counterclaims against parties that sue us for patent, or other intellectual property infringement.”
Twitter reports it has 956 patents and about 100 filed patent applications in the U.S. IBM has been granted the most U.S. patents of any company for 21 straight years.”We presently are involved in a number of intellectual property lawsuits, and as we face increasing competition and gain an increasingly high profile, we expect the number of patent and other intellectual property claims against us to grow,” Twitter said in the filing.