IBM and Chewy Resolve Patent Dispute Concerning Internet Ad Technology

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International Business Machines Corp (IBM) and Chewy have reached an agreement to resolve a patent infringement lawsuit filed by IBM against Chewy over the online pet-food seller’s advertising technology. According to a filing in New York federal court, the companies have requested the court to dismiss the case with prejudice, indicating that it cannot be refiled. While an IBM spokesperson declined to comment on the matter, representatives for Chewy did not immediately respond to requests for comment.

The dispute originated when Chewy, based in Dania Beach, Florida, sued IBM in 2021, seeking a judgment that its website and mobile app’s targeted advertising did not infringe IBM’s patents. Chewy alleged that IBM had made an offer of $36 million for licensing its patents, which Chewy rejected, accusing IBM of demanding excessive licensing fees for patents it deemed to have no value.

In response, IBM, headquartered in Armonk, New York, countersued Chewy, alleging infringement of patents related to website functionality and internet ad targeting. IBM cited a previous case where it had won an $83 million jury verdict against Groupon for similar patent infringement, which Groupon later settled for $57 million. IBM indicated it would seek at least $83 million in damages from Chewy as well, according to Chewy’s lawsuit.

Initially, U.S. District Judge Jed Rakoff ruled in favor of Chewy in 2022. However, the U.S. Court of Appeals for the Federal Circuit recently revived the case, ruling that a jury could find Chewy’s targeted advertising similar to IBM’s patented technology.