It's not really much more than the patents. People tell people that Blackboard will sue them because BB has patents and has sued others before.
Unfortunately, there are plenty of other companies that sue competitors instead of trying to compete with them. I mean, one such company is currently in the #1 spot on the front page: http://news.ycombinator.com/item?id=2081938 Need I list more?
Can they still sue a company that is based outside of the USA? I always wondered this, but never found an answer.
Europe, for example, does not have software patents, but I think that is more complicated than this.
Groupon, can't get groupon.com.au because an Australian guy registered the domain and trademark. Not only can you compete with Blackboard, but if you registered blackboard.com.foo and sold competing software, they would have no recourse in certain jurisdictions.
This is a horrible meme. No other company that I know of has its potential competitors talked out of the business by this gossip of fear.
Hint: not everyone is operating in the U.S.