Business / Gadgets

Alibaba taking shine to patents ahead of IPO in the US

By Bloomberg News (China Daily) Updated: 2014-04-30 07:35

A woman walks past an Alibaba advertisement on a wall in Hangzhou, Zhejiang province, where the e-commerce giant is headquartered. [Photo/Agencies]

China's largest e-commerce company hopes to face down potential competitors by boosting defense

Alibaba Group Holding Ltd is beefing up its patent holdings in the United States, a move that may help it to avoid the pitfalls that bedeviled Google Inc, Facebook Inc and Twitter Inc ahead of their initial public offerings.

China's largest e-commerce company has obtained 102 US patents, including 20 purchased from IBM last year, according to researcher Envision IP. Alibaba also has applied for more than 300 others for technology such as payment processing, product recommendations and picture searches, the US Patent and Trademark Office's database shows.

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"It's a smart move," said Maulin Shah, managing director of New York-based Envision. "When a company announces IPO plans, it instantly becomes a target for competitors already in the market who want to hamper the IPO or who see it as an opportunity to exploit the company at a vulnerable time."

Patents, designed to protect a company's products from being copied, are often used as a shield against lawsuits by competitors. Facebook, which had just 12 patents before going public, and Twitter, with nine, found themselves exposed to legal claims that their products infringed other companies' intellectual property.

"Right now is a time of great leverage with anyone who has an issue or potential issue with Alibaba," said Jim Altman, a patent attorney with Foster, Murphy, Altman & Nickel in Washington, DC, who often represents Chinese companies. "They don't want anything hanging up an IPO."