IBM convinces US appeals court to revive patent lawsuit against Chewy

March 5 (Reuters) - A U.S. appeals court on Tuesday revived an IBM (IBM.N) lawsuit accusing online pet-food retailer Chewy (CHWY.N) of infringing the technology giant's patents covering internet advertising.

The U.S. Court of Appeals for the Federal Circuit reversed part of a New York federal judge's decision to end the case before trial, finding that Chewy's online services may have infringed one of IBM's patents.

An attorney for Chewy declined to comment on the decision. Representatives for IBM did not immediately respond to a request for comment on the decision.

The case began when Dania Beach, Florida-based Chewy sued IBM in 2021, seeking a judgment that it did not infringe IBM's patents after it rejected a $36 million IBM patent licensing offer. Chewy accused IBM 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 targeted advertising. 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. A three-judge Federal Circuit panel agreed on Tuesday that one of IBM's patents at issue was invalid, but threw out Rakoff's decision that Chewy did not infringe part of a second IBM patent.

Rakoff had determined that a jury could not find that Chewy used the same technology as IBM for delivering targeted advertisements based on compiled user data. But the Federal Circuit said that Chewy's privacy policy and internal documents could lead a jury to find that the company targeted ads based on a user's interaction history with its website or mobile app.

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