Group Buying and Coupons: All Patented Up!

from the check-that-box dept

Mon, Apr 19th 2010 7:33pm — Carlo Longino

A startup called Groupon recently brought back some memories of the dot-com bubble when it announced that it had raised a $135 million round of financing, reportedly at a valuation of $1.35 billion. The company offers users in different cities the ability to join a group to buy coupons or discounts from a local business. If enough people join in, everybody gets the deal; if the magic number isn't reached, nobody gets it. In addition to the VC round, the business model is straight out of the bubble, and is pretty close to one used by Mercata, a Paul Allen-backed company that failed back in 2001. Apparently, Mercata garnered a dozen patents based around group buying, and they've now been sold to a Groupon rival called Tippr. That company's CEO told GigaOM that he plans to enforce the patents, but he believes "that patents are primarily a defensive weapon, not offensive." It's not entirely clear how those two statements can be reconciled, but he assures us that he's not a patent troll. In any case, it's hard to see how this situation really benefits anybody (apart from the lawyers), as it foreshadows a lot of money and other resources being devoted to a patent fight -- resources that would be better spent elsewhere.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: groupon, mercata, patents, tippr

18 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Anonymous Coward, 19 Apr 2010 @ 7:51pm

"The company offers users in different cities the ability to join a group to buy coupons or discounts from a local business. If enough people join in, everybody gets the deal"

I'm sorry, I just don't see how this is deserving of a patent. More evidence that our patent office is retarded and that patents are retarded.
[ link to this | view in thread ]
Anonymous Coward, 19 Apr 2010 @ 7:51pm

Re:
(and they claim that patents are for designs, and not ideas. Clearly, this is not the case).
[ link to this | view in thread ]
Rich, 19 Apr 2010 @ 8:10pm

I think I can clarify the seemingly contradictory statements.

When he said, that he believes patents are a defensive weapon, he means that he doesn't want to get sued.

These patent's would not have a great chance in court. The whole patenting business models thing is over.
[ link to this | view in thread ]
abc gum, 19 Apr 2010 @ 8:10pm

flabbergasted
I am not interested in their coupons or in them as an investment. It is hard to believe this is not a scam perpetrated upon the unwary investors. In my opinion, this is just plain stupid ... and why would anyone want to steal this "patent" ?
[ link to this | view in thread ]
Anonymous Coward, 19 Apr 2010 @ 8:17pm

Re:
"These patent's would not have a great chance in court."

Until the company, due to tax deductions, suddenly decides to relocate its operations to East Texas just before a patent suit. The fact that they only did it before a patent suit is just a coincidence.
[ link to this | view in thread ]
Anonymous Coward, 19 Apr 2010 @ 8:20pm

Re:
So he plans to enforce them as a defensive weapon? That's possible, I suppose, but it doesn't seem likely that they meant that if someone who infringes on their patent sues them for infringing on another patent they will counter sue with this patent.

First of all, what are the chances that such a scenario will happen. Secondly, they don't really need to say mention a thing, it goes without saying.
[ link to this | view in thread ]
Anonymous Coward, 19 Apr 2010 @ 8:24pm

Re: Re:
..... they don't need to mention such a thing * ....
[ link to this | view in thread ]
Mell, 19 Apr 2010 @ 8:40pm

VC on Broadway...
This is the plot to The Producers -Max Bialystock and Leo Bloom make money by producing a sure-fire flop.

"If enough people join in, everybody gets the deal; if the magic number isn't reached, nobody gets it." Except the VC who put up the money.
How many tickets would you like?
[ link to this | view in thread ]
Rich, 19 Apr 2010 @ 8:58pm

Re: Re:
No, I was being facetious :) He want's to collect royalties from the entire market that he thinks he owns. He also doesn't want to look like an SOB, so hes apologetically suing the successful implementation(s).

"A method and system are provided that enables a seller to reserve from a supplier a grouping of products"

Why would any company without money to burn, waste finite resources on pointless litigy? The only favorable outcome for them is a long shot and by the time everyone is paid off they may have a few million for all their time, effort and tied up capitol. And that's the unlikely scenario. Not to mention, they now have a bulls-eye on their back. They can expect lawsuits...

Not very well thought out statements like this can be the beginning of the end for a growing company.
[ link to this | view in thread ]
Anonymous Coward, 19 Apr 2010 @ 10:00pm

Re: Re: Re:
"The only favorable outcome for them is a long shot"

The fact that the patent office granted this patent is itself testimony to how retarded our patent system is. and the East Texas courts are equally retarded when it comes to enforcing frivolous patents. and jurisdiction doesn't matter, plaintiffs simply relocate their operations to East Texas only before a patent suit (as mentioned above) and the East Texas courts declare that it's in their jurisdiction to take the case. Who's to stop them? The supreme court? HAH! I wouldn't be so quick to underestimate the stupidity of our legal system. It really is that stupid, but if you're new to this blog that might explain your ignorance (no offense. There is nothing wrong with being ignorant about stuff, heck, everyone is ignorant about 99.999999 percent of everything there is to know).
[ link to this | view in thread ]
Anonymous Coward, 19 Apr 2010 @ 10:04pm

Re: Re: Re:
Not to mention, chances are that anyone they sue will most likely settle, especially after hearing they will be taking a trip to East Texas to fight their case. The plaintiffs in these cases usually rely on defendants to settle and give them money.
[ link to this | view in thread ]
Josef, 20 Apr 2010 @ 1:39am

Re: Just retarded
I'm going to have to agree. I grew up thinking that patents were for people that actually invented something. Putting a patent on an idea is just stupid. But since the patent office is now allowing ideas to be patented, it seems you can get a patent on a business model.

Mike you need to get on the stick and get a patent on CwF + RtB. It sounds mathematical enough to be eligible for a patent. Then when the RIAA and MPAA finally figure it out, you can get royalties.

You better do it quick before they patent it and charge you fees for your blog.
[ link to this | view in thread ]
jamie, 20 Apr 2010 @ 4:28am

Hey, I've got a great idea!

I wonder if a number of the folks chasing these business models could band together and ask for a group discount on licensing the patents?
[ link to this | view in thread ]
Rich, 20 Apr 2010 @ 11:17am

Re: Re: Re: Re:
Patent holders prevail in less than one-third of infringement suits. These types of patents makeup the majority of the 50% of loosing patents that get overturned at trial. They would have a hard time even in ET. They also have the right to petition a higher court to move the trial or appeal in another district.
[ link to this | view in thread ]
Anonymous Coward, 20 Apr 2010 @ 10:56pm

Re: Re: Re: Re: Re:
"Patent holders prevail in less than one-third of infringement suits."

Which is just more evidence of how retarded our patent system is.

"They would have a hard time even in ET."

East Texas enforces a lot of frivolous patents as well.

"They also have the right to petition a higher court to move the trial or appeal in another district."

A higher court located where? People already try to change venues and it fails.

http://www.techdirt.com/articles/20100311/0023488515.shtml
[ link to this | view in thread ]
Charles, 16 May 2010 @ 10:28pm

Boycott Tippr
First, the media shouldn't be giving Tippr one second of coverage. I hate to see them on this website. Second, Martin Tobias is an unethical business man looking for an easy dollar. He's a patent troll. Instead of working hard and building a business from the ground up like Groupon and the other group buying sites, he is going to buy his way in and use the legal system. Martin Tobias is going to use these patents to blackmail the rest of the industry. Third, the group buying sites have played a very important role in the current economy. I believe many small businesses can use group buying very effectively to find new customers. Mr. Tobias will put a halt to this unless we use his site and only his. Fourth, businesses and consumers should stay away from Tippr and put them out of business. Fair competition breeds success and Martin Tobias and Tippr don't believe in fair competition and hard work. Small businesses and consumers need to boycott them and anyone they work with.
[ link to this | view in thread ]
Anonymous Coward, 19 Aug 2011 @ 1:37pm

don't buy from tippr
I have contacted Tippr over ten times regarding a deal I bought and they have not responded. That was over a month ago. Will never buy from them again. Don't take your chances and loose your money, too. There are plenty of other group buying companies that do have a good customer service reputation. Tippr does not even have a phone contact. the only way you communicate with them is via email and that turns out to be a big waste on time and ultimately a waste of your money.
[ link to this | view in thread ]
I hateTippr, 19 Aug 2011 @ 1:38pm

don't buy from tippr
I have contacted Tippr over ten times regarding a deal I bought and they have not responded. That was over a month ago. Will never buy from them again. Don't take your chances and loose your money, too. There are plenty of other group buying companies that do have a good customer service reputation. Tippr does not even have a phone contact. the only way you communicate with them is via email and that turns out to be a big waste on time and ultimately a waste of your money.
[ link to this | view in thread ]