Hitwise has released another staggering data point in favor of Facebook’s domination today. According to Hitwise’s data, 1 in 4 page views in the US took place on Facebook.com as of last week.

In March, Hitwise reported that Facebook overcame Google to become the largest website in the U.S. with 7.07% of all U.S. visits. Google was second at 7.03% at the time. As of September, comScore reported that Facebook was behind Google, Yahoo and Microsoft.

Hitwise also says that visits to Facebook have increased by 60% from the same week last year and represented 1 in 10 US Internet visits last week. And the market share of page views for Facebook was 24.27% last week, 3.8x the volume of the 2nd ranked website YouTube.com with 6.93%.

Of course, it’s important to note that this doesn’t include visits from outside the U.S. and excludes mobile traffic.

Sometime in the last week or so, we’ve heard from multiple sources, Accel Partners has sold very significant chunks of Facebook stock. So significant, in fact, that their ownership percentage has dropped to a point where they are no longer the largest venture shareholder in the company.

Prior to the sale they had somewhere around 10% of Facebook. They paid just $12.7 million for that stock, in 2005. Our understanding is they sold somewhere around 20% of that position, meaning they own 8% or so of Facebook now.

So who bought it, and what was the price?

One source said TCV purchased some $200 million of the stock. And another source says Andreessen Horowitz purchased $80 million in Facebook stock out of their massive new fund.

We’ve heard these trades occurred at a $35 billion valuation from one source. Another said $40 billion, and yet a third said “way lower.” Whatever the price, it’s likely half a billion dollars or more that Accel is taking off the table.

To be clear, we haven’t confirmed some of this. But it’s pretty clear Accel is selling a lot of Facebook stock right now, and that at least Andreessen Horowitz is one of the buyers – they confirmed to us that they have begun buying shares, but won’t comment on price or number.

A year ago Elevation Partners bought $90 million in Facebook stock at a roughly $9 billion valuation. Then earlier this year they invested $120 million more at a $14 billion valuation.

Bill Bishop, an investor and consultant based in Beijing, joined me via Skype to talk about this white-hot Chinese Interent IPO market, that’s even welcoming unprofitable companies into the Nasdaq. “It’s been a crazy couple months, and it looks like it will be crazier through Christmas,” he says. “The goldrush is back.”

One of the most interesting corners of that goldrush is online video. Between dozens of competitors, soaring bandwidth costs, piracy issues and government crackdowns, this has been one of the harder areas for Chinese upstarts to succeed and more than a dozen have died. A lot of Silicon Valley money has died with them. But left standing are YouKu and Tudou and both have filed paperwork to go public.

They are frequently called the “YouTubes of China,” but both are actually becoming the home of more premium and even original scripted content. These companies may have started with a user generated content bent but are more like a Hulu than a YouTube now, or even an HBO or AMC. It seems UGC is hard to monetize everywhere.

With hundreds of millions of uniques per month– they are sucking up insane amounts of bandwidth. The two leading companies Tudou and YouKu have raised more than $300 million between them and only Tudou is close to profitable. Some IPO cash would help them dramatically, as would the marketing event that goes along with a successful IPO.

But with two companies with roughly the same user base and roughly the same revenues both getting ready to file– which one should investors buy? Bishop helps us make sense of the market.

For the past several weeks, there’s been a lot of talk about a large new round of funding that the social startup Tumblr was raising. That culminated today with a report in Fortune with numbers on the round. We had been hearing very similar numbers — around $25 million on a $100 million pre-money evaluation — but it turns out those numbers were likely low, we had heard from sources close to the funding.

But while the numbers are still a bit up in the air, we do know that as Fortune and Business Insider reported earlier, Sequoia Capital is leading this new round. And we’ve heard that previous investors Spark Capital and Union Square Ventures are on board once again. Further, like Business Insider, we’re hearing that Sequoia’s Roelof Botha will join Tumblr’s Board as a part of this investment, which will likely close in the next couple of weeks.

We spoke with Tumblr founder David Karp earlier today, and while he declined to comment on any of the funding news, he did offer up some other details about the company, and where they’re heading.

First of all, Tumblr just opened a new office in New York City. For the past several months they were working at capacity at their old office, with a team of 12. But with the new space that Karp says is roughly four times as big, they’ve already expanded to 16 people now. And they’ll be at 20 employees before the end of the year, Karp says.

Given the growth Tumblr is seeing, it’s pretty incredible that they’ve been able to keep up with only a team of 12, but Karp admits that it has been a challenge. And they’re now putting the focus on ramping up hiring to make sure they can keep pace. He expects they’ll be at 30 employees by early next year, most of them engineers, essentially tripling the size of the company in just a few short months.

If you’re wondering how they’re paying for this hiring spree, see: above.

Karp notes that he worked really hard to keep the team small up until this point, to keep everyone focused, but says that they now have so many directions that they want to go in, that they need more people. One of those is a new Director of Product, Derek Gottfrid, who they nabbed from The New York Times, as we first reported last week.

Another new hire is Rich Tong, a co-founder of Weardrobe, which sold to Like.com in late 2009. Tong is Tumblr’s first specialized community director, leading the fashion community. This is a key area of focus for Tumblr going forward as this community makes up a full 16 percent of Tumblr’s most popular sites, Karp says.

He notes that in the next few months, a huge focus for Tumblr will be how to better cater to the creative communities they’ve attracted. Fashion, film, photography, these are all hugely important to the platform, he says. Karp believes that focusing on them will help separate them from that other social network, Facebook, which has not done a good job of handling these specialized communities so far. In fact, Karp considers Facebook to be “arguably hostile” towards them.

Tumblr wants to be “the best place in the world for the best creative communities,” Karp says. He wouldn’t give any specifics about what they’re thinking about doing here, just that it’s a key area of focus.

Karp declined to disclose any sort of revenue numbers, but does say that they’re making a good amount just from the theme community alone. Tumblr currently sells customized themes, created by the community, at a variety of prices. They split the revenues with the theme creators at an “App Store-like split”, but it is a tiered system. The more expensive the theme, the more generous the split is, he says.

When the new money comes in, you can probably expect Tumblr to continue to focus on scaling and the product short term, rather than any big money-making schemes, is what I’m hearing. You know, the Twitter model.

[photo: flickr/David Karp]

Q&A site Formspring, which raised $2.5 million in Series A funding back in March, reportedly closed its Series B this morning in a $10 million round led by Geoff Yang at Redpoint Ventures. This most recent financing pegs the company at a $45 million dollar valuation.

Formspring is yet another player in the Q&A space piquing investor interest. Since its launch in November, the service now boasts over 16 million registered members, 40 million monthly uniques and around one billion questions answered. Quora, another buzzed about Q&A site, is much much smaller at a modest 200,000 monthly uniques.

Formspring plans to use the cash to focus on building out more social integration into its service. Its first financing round attracted such hot angel investors as SV Angel, Travis Kalnick, Kevin Rose and Dave Morin.

The seventh annual Web 2.0 Summit wrapped up yesterday after an exciting week of panels, interviews, and discussions at the Palace Hotel in San Francisco. The star-spangled lineup for this year’s events included Facebook CEO Mark Zuckerberg, Google CEO Eric Schmidt, Federal Communications Commission Chairman Julius Genachowski, and big-ticket investors like John Doerr and Fred Wilson.

For Web 2.0′s theme this year, conference co-organizers Tim O’Reilly and John Battelle chose “points of control,” explaining, “Fifteen years and two recessions into the commercial Internet, it’s clear that our industry has moved into a competitive phase—a ‘middlegame’ in the battle to dominate the Internet Economy. At this year’s Web 2.0 Summit, we’re focusing on these shifting points of control—strategic chokepoints on an increasingly crowded board.”

According to the event’s symbolic map above, territorial rivalries have begun to manifest in the technology world — as have areas of conflict. A conversation between New York Magazine's John Heilemann and VC big wigs John Doerr (Kleiner Perkins) and Fred Wilson (Union Square Ventures) exemplified this, as the group argued over meaty, contentious issues like whether the tech industry is in a bubble or boom cycle, innovation on the East Coast versus the West Coast, the state of investing and more. TechCrunch writer MG Siegler found it to be one of the highlights of this year’s event; check out his coverage here.

Mark Zuckerberg spoke about Facebook’s new mail client, known as “Facebook Messages,” which the company hopes will reflect the transition to “Next Generation Messaging,” as younger generations move away from using email. He also spoke about Facebook’s recent conflicts with Google, its proposed role as an “enabler” of innovation among small start-ups hoping to disrupt traditional verticals, and, perhaps most interestingly, discussed why focusing on “points of control” overlooks the most critical territory in the industry’s landscape — its “uncharted” waters. Watch the video and read Alexia Tsotsis’s take here and Jason Kincaid’s in-depth review here.

Other points of interest include Twitter Founder Evan Williams’ discussion of the company’s complicated relationship with Facebook and how Twitter has been secretly assigning each of its individual users a “reputation score.” Eric Schmidt also showed off a “Nexus S” and said that we might expect the arrival of Gingerbread in the “next few weeks.” Just in time for Christmas? Peep Devin Coldewey’s analysis here.

For more in-depth TechCrunch coverage, check out our complete list of posts below:

• Wilson Vs. Doerr. Android Vs. iPhone. Facebook Vs. The Web (VIDEO) by MG Siegler
• Twitter Has A (Secret) Reputation Score For Every User by Alexia Tsotsis
• Twitter's Williams On Facebook Relationship: We're Talking To Them Often by MG Siegler
• Hastings On Hulu: If They Become A Competitor, That's Probably Healthy by MG Siegler
• Frank Quattrone: "It's A Lot Easier To Go Public Than To Be Public" by Alexia Tsotsis
• LinkedIn CEO On Why We Need More Than Facebook: Keg Stands by MG Siegler
• LinkedIn Is Now At 85 Million Members, Adding A Member A Second by Alexia Tsotsis
• FCC Head: The Google/Verizon Net Neutrality Proposal Slowed Us Down by MG Siegler
• Back Of The Phone: Instagram, Picplz, Path Vs. Front: DailyBooth by MG Siegler
• Bartz Has The "What Is Yahoo?" Answer Down To 15 Seconds. But It's Vague by MG Siegler
• Bartz: Yahoo Is Serving 6 Million Different Frontpages, 18 Billion Ads A Day by MG Siegler
• Yuri Milner On What It Takes For Digital Sky To Invest by Alexia Tsotsis
• DST CEO Yuri Milner: Facebook Will Help Power AI In Ten Years by Jason Kincaid
• Jim Balsillie To Steve Jobs: "You Don't Need An App For The Web" by Erick Schonfeld
• Zappos CEO Owns Only Three Pairs Of Shoes (Not Counting Flip-Flops) by Alexia Tsotsis
• The Key To Happiness Is Being Yourself (TCTV) by Alexia Tsotsis
• Microsoft Exec: Better Buy Kinect Now If You Want It For The Holidays by Alexia Tsotsis
• Mary Meeker: Smartphones Will Surpass PC Shipments In Two Years by Erick Schonfeld
• Mary Meeker On Ten Questions Internet Execs Should Ask And Answer by Alexia Tsotsis
• Jon Rubinstein On Steve Jobs: "I'm Definitely Off The Christmas List" by MG Siegler
• Adobe CEO: Flash 10.1 Adoption Exceeds Every Other Flash Player In History by MG Siegler
• Adobe CEO On Apple: "Let The Games Begin" by MG Siegler
• Schmidt: Gingerbread Sooner, Chrome OS Later by Devin Coldewey
• 420M People In China Have Internet Access, 99% Use Baidu For Search by Alexia Tsotsis
• Google Exec: In 5 To 8 Years, Everyone Will Have An IPTV by MG Siegler
• Keith Rabois: I Was Excited About Fraud At Square by Alexia Tsotsis
• Pincus On Zynga Stats, "Dog Activated," Frontierville Same-Sex Marriages by MG Siegler
• Schmidt On Google TV Network Backlash: We're Making Dumb TV Smart by Alexia Tsotsis
• Eric Schmidt: "It Is A War For Talent" by Alexia Tsotsis
• Android Gingerbread Supports NFC: Tap Your Phone To Pay by Jason Kincaid
• Interview With Mark Zuckerberg At Web 2.0 Summit (VIDEO) by Alexia Tsotsis
• Mark Zuckerberg: Your Map Is Missing 'Uncharted Territory' by Jason Kincaid
• Fred Wilson: "Facebook Is Not An Unstoppable Juggernaut" by Alexia Tsotsis
• Ron Conway's Crystal Ball: 12 Startups On The Cusp by Jason Kincaid
• Interview With Twitter's Evan Williams At Web 2.0 Summit (VIDEO) by Alexia Tsotsis
• John Battelle On Why It's Not Web 3.0 And More (TCTV) by Alexia Tsotsis
• Watch The Livestream Of The Web 2.0 Summit Here (Day 3) by Alexia Tsotsis
• Watch The Livestream Of The Web 2.0 Summit Here (Day 2) by Erick Schonfeld

Earlier today, we noted that Amazon unveiled a new way to give people Kindle books as gifts. They’re also launching the same functionality for their Music Store as well, with MP3 Gifting.

To be honest, it’s a little surprising that Amazon didn’t have this feature before. But it comes with a nice little bonus that only someone like Amazon can offer: if you receive an MP3 as a gift and decide you don’t want it, you can instead opt for an Amazon credit for the same amount, which you can use towards any product they offer.

Just as with the Kindle book gifting feature, you simply have to enter a recipients email address, add a message, and choose the MP3(s) you want them to receive. Then you pay for it, and you’re done. They’ll get a message that an MP3 gift is waiting for them and a link to download it.

Amazon says the process takes less than 5 minutes. And because Amazon’s MP3s are DRM-free, they’ll work anywhere.

HowRandom, a site for college students, launches today with one core feature — the ability to anonymously chat with people from other schools. There’s no photo uploading, file sharing or video capabilities, just a text entry line and a chat widget.

The student on student communication happens on two levels, a test function where you casually enter in your school (warning, you have to type the full word “University”) and a verified function which allows you to type in your .edu address in order to get “Verified” as a bona fide college student.

Explains founder Jon Cook, “It's a way for guys at Harvard to meet girls at Yale, etc. And it's not intrusive. HowRandom has a very solid viral loop. It has the Facebook-like .edu exclusivity. And it's extremely simple to use.”

Cook and co-founder Jason Humphries think of HowRandom as more of a social experiment than a business. They hope it will mirror the randomness of life and “foster real-world meetings and interactions between two people that might otherwise never meet. " Like a text-based Chatroulette with no penis problem, there’s also a next feature in case you don’t like who you’re chatting with.

Cook says he wants to keep evolving the app through user feedback, and is considering including limited profile option along with the “Verified” logo.

Facebook initially restricted its users to college students with .edu addresses and that element was crucial to its success, this is also HowRandom’s hook. Colleges are hotbeds of virality in more ways than one, and starting off there is a good move for any social app.

Resolute Marine Energy— a Boston startup whose technology harnesses wave energy for power generation, and transports seawater to on-shore desalination facilities— won Global Entrepreneurship Week’s inaugural Startup Open, the competition’s directors revealed today.

As their prize, co-founders and core team members of Resolute Marine receive an all-expenses-paid, one-day trip to the island owned by Sir Richard Branson where they will embark on a Maverick Business Adventure. These events draw groups of entrepreneurs together to network while engaging in some crazy activities, like cage diving with Great White sharks, off-road racing or kite boarding.

The Startup Open was run by the Kauffman Foundation, the Kansas City organization dedicated to the study and promotion of entrepreneurship, using iStart software (formerly StudentBusinesses.com) to receive, review and process applications.

Unlike typical business competitions, there was no final pitch event, judges did not meet to review applications, and winners were selected based on compiled judges’ scores. Winners were picked from a pool of 50 finalists. The competition received 144 qualifying applications.

The chief operating officer and co-founder of Resolute Marine, Olivier Ceberio, spoke with TechCrunch about his company and the win. The following is a condensed version of the conversation.

Q: What does your company do?

A: Basically, Resolute Marine Energy uses the incredible power of the ocean to produce drinkable water and electricity.

William Stady who is my co-founder and chief executive, and I really wanted to solve a serious global problem. Over one billion people today lack access to safe drinking water. Over thirty percent of people, meanwhile, are living within 100 kilometers of the ocean according to a study we read by the Socioeconomic Data and Applications Center.

People who lack access to safe drinking water also usually lack access to the power grid or affordable power. Our small scale system converts energy from the waves into electrical power or into pressurized seawater, so we can provide both drinking water and clean, more affordable power.

Q: How does your technology work?

A: Our engineering team led by Cliff Goudey and Allan Chertok have been working on a wave energy converter that’s not portable, but easy to ship and set up. It’s somewhere between two and three meters of width. One power plant and desalination processor for a community of about 30,000 people would have fifty of these, perhaps.

The wave energy converter is like a pedal. It is attached to the bottom of the sea, or the seabed. When a wave starts, the pedal moves back and forth. It extracts energy from the wave, and we use that to produce either electrical power or pressurized sea water. It can produce one or the other. We send those to the shore to drive a desalination system. The technology transports energy, or it can transport pressurized seawater, which is an input to the desalination processing systems on-shore.

We have not created a desalination processing system ourselves. For that, we will partner with other companies. We have begun talking with some of the world's largest providers of small scale desalination systems.

Q: Who are your customers? Are your systems out on the market yet?

A: We have an early stage customer with whom we plan to do a commercial product installation by the end of 2012 in South Africa. We're considering that as our launch market. When we do our commercial pilot, the idea will be to install our wave energy converters, and a desalination processing system, then let it work for a couple of months producing water in a self-sustaining, off-the-grid way.

When we are ready to commecialize the system and install it, the wave energy converters will be in situ for 10 years or up to 20 years, and we will provide maintenance over that lifetime.

We have to test our system out before the commercial pilot, probably in New England most likely in Maine. In the U.S. three states that are very active in wave energy research are Maine, Oregon and Hawaii. But worldwide, the core of the wave energy industry would be in Scotland, and Australia with some others in Europe where governments really want to find and use renewable energy. I feel that U.S. has been somewhat behind in this.

Q: How will winning this competition effect your business?

A: Anything that can help us get to commercialization as soon as possible is helpful. These competitions are critical for us. They help you get endorsements, press, [access to new] networks, feedback on your projects and from the community beyond the cleantech professionals you know.

We competed at Ignite Clean Energy in 2009, which is now a part of the Cleantech Open, and at Masschallenge this year where we were among the finalists. We got in-kind services but no major cash prizes. We have also won several government grants. Surprisingly they are not near enough to pay for everything a cleatech startup needs.

We will be raising private capital to finance all the aspects of our business from intellectual property protection, to rent and marketing. We will also continue along the competition circuit, and hope to compete and win prize money from some that are focused on water technology.

[UPDATE: We spoke to Peter Thiel today who felt his comments on Saverin were taken out of context and exaggerated. He clarified, "I don't have a strong opinion on his work performance, but I do think that he did very well during his very short time at Facebook. I didn't mean it to be a hit on him."]

As far as I know, and my Web searching skills can take me, early Facebook investor Peter Thiel hasn’t yet publicly commented on the role of Eduardo Saverin, who co-founded and initially bankrolled ‘thefacebook’ back in the early days.

Well, Thiel did exactly that, on The Big Think (video below). Asked who Saverin is, Thiel says he was “affiliated, quasi-employed at Facebook in 2004″. The fun doesn’t stop there.

If you’re familiar with the origins of Facebook, whether or not you call yourself familiar with it because you’ve seen the movie The Social Network or not, you’ll know that Saverin was pushed out just when things got rolling for the fledgling company.

This happened around the time PayPal co-founder turned investor Peter Thiel and Napster co-founder Sean Parker got involved. Saverin famously sued Facebook and CEO Mark Zuckerberg in April 2005, and prevailed. He still owns 5% of Facebook (which means he’s worth over $1 billion nowadays)

Thiel chides Saverin for not being cut out for his role and that he wasn’t remotely doing his job at the time, which was supposed to be selling advertisements for Facebook. Ultimately, Thiel says, Saverin did well for not doing much.

He also says The Social Network was “wrong on many levels”, and the Hollywood’s “caricature of capitalism”.

The full transcript is copied below the video.

Question: Who is Eduardo Saverin?

Peter Thiel: He was a student at Harvard who was affiliated, quasi-employed at Facebook in 2004.

Question: What kind of capitalism is it that cuts Eduardo Saverin out of Facebook?

Peter Thiel: Well, it is the kind of caricature of capitalism that one sees in Hollywood where, I think the movie was wrong on many levels. It was basically a description of sort of a zero sum world that is mainly the way Hollywood works where people gained at the expense of other people. You know I think Face… the story of Facebook has been one where it's been an incredible positive sum gain for everybody involved for the investors, for the employees, and for the world at large. All the stakeholders have really gained tremendously.

You know, I don't think… I don't think that Eduardo was cut out. You know, he was not doing his job and therefore you know. His job was to sell advertisements for Facebook and he was not remotely doing that job. You know, he ended up making a lot of money because he was partially involved and had helped in some small financial ways in getting the site started at the very beginning at Harvard. But I think the overall context of it was that it is a story where he did extraordinarily well relative to what he had done and I think there's a very… there's a very different.

Black Friday, or the day after Thanksgiving, has always been known as one of the year’s biggest holiday shopping days. But in the past five years, Cyber Monday, the Monday following Thanksgiving, has become a a serious shopping day for online sales and promotions. Last year, Cyber Monday brought in $887 million in sales compared to $595 million in online spending on Black Friday. Today, Compete is releasing a survey that indicates that once again consumers could be choosing Cyber Monday for shopping as opposed to Black Friday.

According to Compete’s data, 45% of respondents indicated they will do their holiday shopping on Cyber Monday, versus 37% who plan to shop on Black Friday. Interestingly, Black Friday shoppers are planning to spend more money than Cyber Monday shoppers, with Black Friday shoppers averaging an expected $353 and Cyber Monday shoppers averaging an expected $233.

Compete says the increased spend is likely due to more people shopping for high-end items such as electronics, clothing, toys and games on Black Friday than on Cyber Monday. The report shows that 11%, 32% and 23% more people will shop for these items, respectively, on Black Friday than on Cyber Monday.

Last year Hitwise reported that Amazon took the top spot on Cyber Monday and Black Friday.

It’s not surprising that Cyber Monday is becoming more popular than Black Friday, especially if deals are equally as good on both days. Who wants to wait in long lines at 4 am the day after Thanksgiving if they can just click Buy It Now on their computer?

http://player.ooyala.com/player.swf?embedCode=o4NTF1MTqTww-37TTvEiS1xM9jot2ndS&version=2

Oh, Microsoft. You just can’t seem to help but be the last one to every party you attend. You launched the Kin just as messenger phones began to die, then you launched Windows Phone 7 when the smartphone wars were so far underway that most folks had already declared an allegiance.

And now you’ve got your motion gaming platform, the Kinect, hitting the shelves years after the Nintendo Wii and months after the Playstation Move. I’ve spent the last week living with a Kinect in my life. How does it fare? Find out after the jump.

Read the rest at CrunchGear >>

A few weeks ago, some data came out suggesting that Netflix alone accounts for 21 percent of Internet traffic during peak TV hours. But if you add in a couple other sources of streaming video from the Web, namely YouTube and other forms of Flash video, the traffic share of Web video jumps to 37 percent (with 10 percent from YouTube and 6 percent fro Flash video). BitTorrent is another 8 percent, with much of that being video as well.

These startling numbers were put together in a slide by Morgan Stanley Internet analyst Mary Meeker during her presentation at the Web 2.0 Summit earlier this week. All HTTP web traffic is only 23 percent of the total.

Does this mean that the No. 1 activity on the Web is watching videos? Not exactly. The traffic is measured in terms of bandwidth used and how many bits are transferred. Streaming a video file requires an order of magnitude more bits than loading a Web page. As a result, video is hogging up the bandwidth.

And the longer the video, the more bandwidth it requires. Which perhaps explains why Netflix accounts for twice as much bandwidth usage as YouTube. People are streaming full-length two-hour movies from Netflix, not two-minute video clips. People are still watching a lot more videos and spending more time on YouTube. In October, viewers spent 23.4 billion minutes on YouTube compared to 750 million minutes on Netflix.com, according to comScore. And YouTube attracted 116 million unique visitors versus 20 million for Netflix.

When you see these numbers, just remember that what they are measuring is the traffic load on the Internet in terms of bandwidth consumed, not time spent. Still, if video is eating up more than a third of Internet bandwidth during primetime hours, imagine what it will be if a decent TV experience ever comes to the Web.

Group buying site Groupon is suing one of the many small startups trying to emulate its successful social shopping model over a patent that was originally filed over a decade ago. The target of the lawsuit is MobGob, which enables people to use their existing social networks to gather their purchasing powers and collectively buy goods or services from sellers online. The complaint is embedded below.

Groupon alleges that MobGob infringes one of its patents by operating a system for aggregating demand for the purchase of a product by a number of individual buyers.

MobGob, as many group buying sites these days, allows sellers to provide a conditional sales offer for a product or service and set a price depending on the aggregate amount of acceptances of the conditional sales offer made in a specified and limited time.

Groupon claims MobGob knowingly infringes one of its patents, no. 6,269,343, entitled “On-line marketing system and method”, causing them harm to their business, market, reputation and goodwill. Groupon is asking for the company to stop infringing on this patent and to hand over “all infringing products and systems in their possession”, including the MobGob website, for destruction.

The description of the patent-in-suit reads:

The present invention provides a method and system that allows sellers to communicate conditional offers to potential buyers. The conditions include prices that depend on the aggregate amount of goods or services that buyers collectively agree to purchase by a given time and date.

The invention facilitates “demand aggregation”, that is, aggregating demand by potential buyers (who may or may not know each other), for products offered by sellers. This invention allows sellers conveniently to offer “Demand-Based Pricing”, that is, prices which go down as the volume of units sold in any given offer goes up.

A seller can therefor offer volume discounts to buyers acting as a group, even when the buyers may not have any formal relationship with one another.

What I found interesting about this lawsuit is that the patent was first filed back in 1999 and issued two years later, while Groupon is only three years old. The inventor listed is Matthew Pallakoff, currently in charge of mobile UI / UX for digital products at Barnes & Noble, and the company that the patent was assigned to is MobShop (not this one).

MobShop was in fact an early group buying site that raised a ton of money from entrepreneur-turned-VC Marc Andreessen and Mayfield Fund at the hight of the early-century Internet boom and unceremoniously folded in 2001, almost as quickly as it had risen.

I was curious to know whether Groupon somehow got hold of the patent through acquisition, which is particularly interesting given that they’re now filing lawsuits against smaller rivals based solely on the possession of the patent. Reached by email, Groupon founder and CEO Andrew Mason told me that it’s a “funny story” – I’m still waiting for him to get back to me and tell me what it is (will update if and when he does).

Update: so basically, Mason told me that the reason they’re suing MobGob is because they actually tried to patent-troll-sue Groupon first, under another name and with a patent that was issued at a later time than the patent-in-suit.

He added that Groupon has absolutely no intention of going after companies in the group buying space, but that they bought the early MobShop patent to protect themselves in “crazy lawsuits” that get filed against them now that they’re in the picture so much.

In other words, he says they bought the patent for usage in lawsuits filed against them, not with the intention to sue other group buying services.

(Thanks to patent news site Priorsmart for the heads up)