Extortion? Yahoo Sues Facebook Over Vague Patents Infringement Claims

Omri Shabath

Clown JudgeYahoo has executed its threats against the social network giant Facebook and filed a lawsuit in Federal District Court in California, over alleged 10 patents infringement claims. Please allow me to summarize the lawsuit before I elaborate furthermore:

Dear Mark Zuckerberg, because your company is right before an IPO and you probably won’t seek any complications due to this sensitive timing (and because we can’t invent something new ourselves), we are suing you for many vague foggy things as we already did in the past to other companies.

In Yahoo’s legal complaint, it is basically claiming that Facebook is using many of Yahoo’s veteran intellectual properties and even basing its social networking platform technology on Yahoo’s patents which (Yahoo’s own words) “got there first”. Here’s one example from the 19 pages lawsuit (among many) about this claim:

Yahoo Lawsuit Facebook History Section

“Facebook was not launched until 2004, ten years after Yahoo! was founded. Facebook has since grown into one of the most widely trafficked sites on the internet. That growth, however, has been based in large part on Facebook’s use of Yahoo!’s patented technology”.

Funny as it may be heard, Yahoo is trying to squeeze Facebook for this ambiguous claims. What’s even more funny (or sad, depends how looking at it), is that it will probably receive a generous settlement package from Facebook just to shut down this legal issue.

You should be a very naive person to think that the timing of the lawsuit is coincidental. Facebook is facing one of the biggest public offering in the history and it is trying to avoid any legal controversy that might negatively affect that. This is why filing the lawsuit on this certain time-frame rising the chances for a generous settlement drastically.

And as I mentioned before, Yahoo already had some lucrative experience in the past with such tactics. Back on 2004, right before Google went public (about two weeks before the IPO actually) it settled with Yahoo for another patents infringement lawsuit, where Yahoo received nearly 3 million Google shares which translated later on to almost $1.5 billion.

So, what are those 10 patents which Facebook is allegedly infringing exactly? Here’s a brief overview (click for more details from the United States Patent and Trademark Office):

  • Patents number 6907566, 7100111 and 7373599– Method and system for optimum placement of advertisements on a webpage.
  • Patent number 7668861– System and method to determine the validity of an interaction on a network.
  • Patent number 7269590– Method and system for customizing views of information associated with a social network user.
  • Patent number 7599935– Control for enabling a user to preview display of selected content based on another user’s authorization level.
  • Patent number 7454509– Online playback system with community bias.
  • Patent number 5983227– Dynamic page generator.
  • Patent number 7747648– World modeling using a relationship network with communication channels to entities.
  • Patent number 7406501– System and method for instant messaging using an e-mail protocol.

Here’s Yahoo’s official statement about the issue:

“Yahoo! has invested substantial resources in research and development through the years, which has resulted in numerous patented inventions of technology that other companies have licensed. These technologies are the foundation of our business that engages over 700 million monthly unique visitors and represent the spirit of innovation upon which Yahoo! is built. Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court. We are confident that we will prevail.”

And here’s what Facebook’s spokesperson said regarding this matter:

“We’re disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation. Once again, we learned of Yahoo’s decision simultaneously with the media. We will defend ourselves vigorously against these puzzling actions”

There will certainly be more to come about this dispute in the future to come. It’s unfortunate that this case probably won’t be resolved in a creative way, such as the following one: