IBM, Chewy drop patent dispute over internet ad technology

International Business Machines Corp IBM and Chewy CHWY have agreed to end a patent infringement lawsuit from IBM over the online pet-food seller's advertising technology, according to a filing in New York federal court.

The companies asked the court on Monday to dismiss the case with prejudice, which means it cannot be refiled. Representatives for Chewy and IBM did not immediately respond to requests for comment and more information, including whether the lawsuit had been settled.

The case began when Dania Beach, Florida-based Chewy sued IBM in 2021, seeking a judgment that its website and mobile app's targeted advertising did not infringe IBM's patents. Chewy said it rejected a $36 million licensing offer from IBM and accused the tech company of seeking "exorbitant licensing fees for early Internet patents having no value."

Armonk, N.Y.-based IBM countersued Chewy for infringing patents related to website functionality and internet ad targeting.

IBM separately won an $83 million jury verdict against Groupon in 2018 for infringing related patents in a case that Groupon later paid $57 million to settle. IBM said it would seek at least $83 million in damages from Chewy as well, according to Chewy's lawsuit.

U.S. District Judge Jed Rakoff ruled for Chewy in 2022. The U.S. Court of Appeals for the Federal Circuit revived the case earlier this month, ruling that a jury could find that Chewy targets ads to its users in the same way as IBM's patented technology.

The case is Chewy Inc v. International Business Machines Corp, U.S. Court of Appeals for the Federal Circuit, No. 22-1756.

For Chewy: Joshua Raskin of Greenberg Traurig

For IBM: Karim Oussayef of Desmarais LLP

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