In patent showdown, IBM's arsenal dwarfs Twitter's

Reuters

* IBM claims Twitter infringes three IBM patents

* Pressure likely on Twitter to buy more patents -experts

* Companies nearing an IPO often face patent claims

By Dan Levine

SAN FRANCISCO, Nov 4 (Reuters) - International BusinessMachines Corp's patent demand against Twitter Inc as it approaches an initial public offering highlightshow few patents the social media company possesses compared withthe established tech players.

IBM has accused Twitter of infringing three IBM patents, oneof which relates to online advertising, according to a Twittersecurities filing on Monday. Twitter said it has "meritoriousdefenses" to those claims, and IBM has not filed a lawsuit.

A Twitter spokesman declined to comment beyond the filing,and an IBM representative also declined to comment.

Long a prodigious stockpiler of intellectual property, IBMcurrently holds nearly 87,000 U.S. patents and publishedapplications, according to a government database. Twitter,meanwhile, has only three. This suggests that the legalmaneuvers involving IBM and Twitter will increase the pressureon Twitter to buy more patents, in order to build its leverageagainst older tech companies, patent experts say.

"It's not about the patents, it's about signaling to themarket that you have a strong position so people don't line upto sue you," said Ron Laurie, a specialist in IP and investmentbanking for Inflexion Point Strategy.

Patent claims against companies approaching an IPO arerelatively common, as plaintiffs hope the need for a targetcompany to minimize risks might force a lucrative settlement. InSeptember, Twitter was sued twice for patent infringement thesame week it announced its plans to go public, according torecords maintained by Westlaw, a Thomson Reuters unit.

Twitter raised the top end of its IPO price range by 25percent on Monday, to $23 to $25 per share.

Last year Yahoo Inc sued Facebook Inc forpatent infringement two months before Facebook's IPO. Yahooeventually withdrew the lawsuit after a new Yahoo chiefexecutive took over.

However, Facebook ramped up a patent-buying spree shortlyafter the lawsuit was filed. Facebook bought 750 patents fromIBM for an undisclosed sum, and then paid Microsoft Corp $550 million for hundreds of patents that originatedwith AOL.

Leading up to its IPO, Facebook had disclosed 559 U.S.patents and applications. The company currently owns 2,151patents and applications, according to the government'sdatabase.

Twitter has been vocal in the ongoing debate over how strongpatent protections should be when it comes to software. Lastyear the company announced that it would not use patents foroffensive purposes without permission from the employee whoinvented the technology. The company would only use patentsdefensively, it said, which means the patents could be used tocountersue anyone who had struck first.

While the specific patents cited by IBM may not stand up incourt, it is the threat from a company with so many resourcesthat affects Twitter.

"It may turn out that these patents, under close scrutiny,are not terribly impactful," said Sanjay Prasad, an intellectualproperty consultant in Silicon Valley. "But there's a differentissue of public perception, and in an IPO that can beimportant."

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