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Yahoo’s Weaponization: Patent Suit Against Facebook

Yahoo sues Facebook,
Claiming patent infringement
On multiple fronts

In yet another patent-related Clash of the Titans, Yahoo has sued Facebook for infringing 10 patents encompassing 285 claims.

The suit was filed in Federal District Court in San Jose, California, and relates to patents filed from 1997 to 2007 and issued from 1999 to 2010 for advertising, customization, messaging, privacy, and social networking.

The complaint seeks unspecified damages, and also asks that the damages be tripled, “in view of the willful and deliberate nature of the infringement.”

The complaint quotes the words of Facebook co-founder Mark Zuckerberg in support of its infringement allegations:

He has stated, “The thing that’s been really surprising about the evolution of Facebook is — I think then and I think now — that if we didn’t do this someone else would have done it.” In Mr. Zuckerberg’s view, “Getting there first is not what it’s all about.”

The timing of the suit – after Facebook announced its planned initial public offering but before the IPO takes place — may suggest that Yahoo is hoping for a fast settlement rather than digging in for a long court battle.  Facebook may have an incentive to settle quickly, and pay a premium licensing rate, rather than risk the suit damaging its perceived value with investors.

Facebook, launched in 2004, has very little patent “ammunition” for a countersuit or cross-license of its own, with only 21 patents compared to 1,029 for Yahoo.

Yahoo has made a concerted efforts to stockpile patents, reportedly telling employees they were needed to defend against patent trolls.  One former employee, Andy Baio, says he was told the patents would only be used defensively. Now he says Yahoo has “weaponized” his work and that the Facebook suit is an “insult” to him and other engineers who filed patents on Yahoo’s behalf.

Yahoo, founded in 1994, has been struggling of late;  its revenues have declined for three straight years.  The company appointed a new CEO only two months ago and is reportedly preparing to lay off thousands of its 14,000 employees.

The complaint can be found here.

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