Groupon Patents and Lawsuits

Deal-of-the-day giant Groupon has recently come under fire due to their continued efforts to sue their competitors.  The legitimacy of these lawsuits has been brought into question, as they are based on the concept of online collective buying. Groupon feels they have exclusive right to the online collective buying process because of a company owned patent.  The patent at the center of these lawsuits describes Groupon’s collective buying process as the “On-Line Marketing System and Method”. While there have been many different companies that offer a very similar service to Groupon, the company has aimed their lawsuits at competitors who threaten their business.

Mobgob and Scoopon have both been targeted and Groupon currently has lawsuits against them. Groupon claims their business has been hurt due to patent infringement to these lesser-known websites, which has caused harm to their business, reputation, market and goodwill. As was the case in the suit against Mobgob, Groupon hopes to gain control of the offending company’s website in order to eliminate it. While Groupon owns a patent that it claims protects this process, can they really claim right to an idea that has been in practice for some time?

Collective buying is nothing new.  BJ’s, Sam’s Club and Costco are businesses that are based upon this concept; consumers pay lower prices when buying as a group than they would individually. And really, every modern day big box store or discount website is based upon the same principle. Buying a large amount of a product and selling it at a relatively low price ensures sales for the manufacturer, a profit to the company serving as the middleman, and a bargain for the consumer.

Companies like Groupon and their competitors simply take this same process one step further. Creating local markets that allow customers to collectively join in on good deals has simply been a natural progression of business. This is exactly what a consumer is doing when shopping at any large, corporate owned store.  A person could even argue that the modern American consumer business industry is based on the collective buying process.  In Groupon’s case, the consumer is able to get a good deal on the desired product because there is no guarantee that the proposed deal will go through. If there are not enough buyers interested in a particular deal, it will not happen.

However, this same process occurs in all forms of business.  When a particular product does not draw enough sales it will eventually become unavailable.  While this process could take several months in normal circumstances, collective buying daily-deal websites simply allow the deal to expire at an expected time, rather than having the product in question become less available, until it is eventually no longer carried. When done online or at a local big box store, collective buying is, quite simply, a natural progression of business.

Submitted by Brain Good at DealDoc.com Daily Deals