BY Nicholas Hasenfus
Although Twitter is very popular, it has not yet been profitable. Because of this, Twitter wants to go public to raise money much like Facebook and Google have. In the first six months of 2013, Twitter has lost over $69 Million although revenue has more than doubled from 2012 to $253 million with a yearly estimated earning of $650 million. In Twitter’s statement to the SEC they acknowledged another financial problem they may run into, IBM has alleged that Twitter has infringed on three of its patents.
As reported in a recent CNET story, Twitter has revealed that IMB has alleged three patent infringements by Twitter. The three patents in question are: U.S. Patent No. 6,957,224: Efficient retrieval of uniform resource locators; U.S. Patent No. 7,072,849: Method for presenting advertising in an interactive service; and U.S. Patent No. 7,099,862: Programmatic discovery of common contacts. IBM has invited Twitter to try and settle these issues out of court before Twitter goes public.
In Twitter’s SEC filing, which can be read here, Twitter reveals that they are, “involved in a number of intellectual property lawsuits” and that they expect they will continue to be involved in more. Twitter also states that it is hard for them to tell which intellectual property claims they are violating, but any claims, settled or not, may be expensive and will take time, as well as resources, away from managers. Furthermore, Twitter cannot say what kind of impact any intellectual property lawsuit rulings may have.
It is going to be difficult for Twitter regardless of their decision to settle or go to court with Microsoft. Twitter does not have as much money to pay attorneys like Microsoft would. Further, if Twitter decided to settle with Microsoft, they may have to pay a lot of money in licensing agreements. It may be best for Twitter to try and settle out of court, and if Microsoft still believes they have infringed on their patents taking Microsoft to court may be less expensive in the long run for Twitter than a hefty licensing agreement especially because Twitter claims in their SEC filing that they have defenses to Microsoft’s claim.
