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Tippr Buys Up Patents to Take on Groupon

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Could a broad set of patents around collective buying be the ammo Tippr needs to chase Groupon? That’s what CEO Martin Tobias is betting, having bought up the intellectual property generated by bubble-era Mercata from its investor Paul Allen.

Groupon — which is in the process of raising $130 million on a $1.35 billion valuation for offering online deals redeemed at local businesses, according to TechCrunch — is a runaway hit. And a hundred or so other companies in the collective buying space are duking it out to grab a share of that market. But Tippr, which just launched in February, has a special weapon up its sleeve: intellectual property.

Tippr comes out of Kashless, a local classifieds system founded by Tobias, the former CEO of biodiesel company Imperium Renewables. Around the same time last year that Kashless was finding that classifieds weren’t the best way to drive customers to local businesses, Tobias saw the rise of Groupon. He happened to know that Microsoft (s MSFT) co-founder Paul Allen, who’d invested something like $90 million in the failed Groupon of the late ’90s, Mercata, still owned that company’s patents.

Mercata didn’t work for a number of reasons: Online social networking didn’t exist back then, customers were much less likely to spend money online and the company missed the IPO window before the market crash. But it did accumulate 12 patents, with two more pending, that Allen recently sold to Tobias, receiving an equity stake in Kashless/Tippr for his firm Vulcan Capital. (Kashless raised $5 million from RRE Ventures a year and a half ago.)

Tobias wouldn’t name what law firm he’s working with, but did say he plans to enforce the patents to protect Tippr. And he maintains that he’s not a patent troll — Tippr will soon expand to cities beyond Seattle, where he said it is already the third-biggest offering behind Groupon and LivingSocial.

“My personal belief is that patents are primarily a defensive weapon, not offensive,” Tobias told us. “The only reason I spent a lot of money to get the patents is to make a viable business. If all you’re doing is trying to extort people that’s not a viable business.” The other way Tobias plans to compete is by building Tippr as more of a white-label technology company and less of a brand. Tippr deals are already running as a dynamic ad unit for Seattle Magazine and the Seattle P-I, he said (pictured below).

The Mercata patents seem quite broad, for instance “Attaining product inventory groupings for sales in a group-buying environment” and “Demand aggregation through online buying groups.” One feature that Tobias is particularly interested in is the concept of accelerating deals, where “as the group gets bigger the value of the voucher gets better.” I wrote last week about a Groupon competitor, HomeRun, which is doing something just like that (it calls them “Avalanche” deals). This might potentially be covered by the Mercata patent “On-line group-buying sale with increased value system and method,” Tobias said.

If you want to check out the full Tippr patent list, it runs along the bottom of its home page.

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15 Responses to “Tippr Buys Up Patents to Take on Groupon”

  1. Mike Lazaraus

    Boycott Tippr wow that is so slimey, that is not even being original its just being a Patent Troll and a complete d-bag. That is not how business is suppose to be run…

    You’re right @Funny Mark Tobias is a complete troll and I would so boycott Tippr that’s ridiculous.

  2. Im all for innovation but didnt tippr claim there were a white label solution 3 months ago? If so, why did they have to aquire a group buying software provider just 2 weeks ago? Im guessing because they didnt have a white label system afterall. I work for a publisher and we dont work with people just becuase they have cool powerpoints….we work with folks that have proven solutions and have been around a while. Obviously they will need 12-18 months to get the bugs out of this system they just bought. I keep hearing about these patents, if they felt they could actually sue someone that lowers the price when more people buy, they would have gone after the incumbant in the market….groupon or just sued Costco. Cmon…no one is this dumb.

  3. Charles

    First, the media shouldn’t be giving Tippr one second of coverage. Second, Martin Tobias is an unethical business man looking for an easy dollar. He’s a patent troll. Instead of working hard and building a business from the ground up like Groupon and the other group buying sites, he is going to buy his way in and use the legal system. Martin Tobias is going to use these patents to blackmail the rest of the industry. Third, the group buying sites have played a very important role in the current economy. I believe many small businesses can use group buying very effectively to find new customers. Mr. Tobias will put a halt to this unless he use his site and only his. Fourth, businesses and consumers should stay away from Tippr and put them out of business. Fair competition breeds success and Martin Tobias and Tippr don’t believe in fair competition and hard work.

  4. JLevich

    I’ll tell you what…if he does that to me, we’ll go after him not just with a fine legal display, but also physical. EVERYBODY understands the fear of physical pain.

    Using that method, makes the legal team/lawyers/patent brigade back down…

    Same goes for Bandwagon jumpers. Copy my formula and I will bankrupt you then finish you.

  5. CEO Martin Tobias is a patent troll…plain and simple. He’s also a homewrecker. I hope Groupon goes after him/his patents…its so lame that his only business “angle” is the patent and the fact that he’s defending them shows his nature as a person. Stay away from him and tippr. Groupon, please go after him.