Twitter Inc (TWTR) Signs Agreement With IBM, Acquires 900 Patents

Twitter Inc (NYSE:TWTR) acquired 900 patents from International Business Machines Corp. (NYSE:IBM), and also entered into a cross-licensing agreement with the company. The settlement with the IBM and acquiring majority of its patents will prove useful for Twitter to take in bigger rivals Google and Facebook.  The financial terms of the agreement have not been made public.

Twitter following Facebook

Twitter Inc (NYSE:TWTR) in a statement said that the, deal with IBM will give the company “greater intellectual property protection and gives us freedom of action to innovate.”

A cross-licensing agreement with IBM would protect Twitter against similar accusations in the future. Twitter it seems like is following a strategy similar to its bitter rival Facebook, which also faced similar accusations before its IPO, in 2012. Since then, the social networker has been collecting patents from big tech firms including Microsoft Corporation (NASDAQ:MSFT) and IBM. Before filing its IPO, the micro-blogging site had only nine patents and 95 pending applications.

In a joint with IBM on Friday, Twitter’s legal director, Ben Lee said “This acquisition of patents from IBM and licensing agreement provide us with greater intellectual property protection and give us freedom of action to innovate on behalf of all those who use our service.”

IBM a patent treasure

In November, which also was the eve of Twitter’s high-profile initial public offering, IBM accused the micro-blogging site of infringing three of its patents. Three patents that Twitter Inc (NYSE:TWTR) was accused of breaching were related to “…Efficient retrieval of uniform resource locators (URLs), Method for presenting advertising in an interactive service, and Programmatic discovery of common contacts.”

IBM has been regular applicant for patent filing, and owns around 41,000 patents of which 6,809 were awarded last year alone. The company is also one of the biggest spenders on research. The New York-based company has also sold patents to Google Inc (NASDAQ:GOOG) to help the internet giant protect in the patent wars among smartphone makers. IBM also sold 750 patents to Facebook Inc (NASDAQ:FB), which helped the social networker to site settle a lawsuit with Yahoo! Inc. The licensing revenue for IBM comes approximately $1 billion a year, and last year accounted for 1% of sales.