Yahoo is Suing Facebook Over 10 Patents

On Monday Yahoo Inc filed a lawsuit against Facebook in the U.S. District Court for the Northern District of California, claiming that the social website infringes on ten patents that include methods and systems for advertising on the Internet. The patent lawsuit conveniently follows news of Facebook's upcoming initial public offering which will reportedly value the company around $100 billion.

Facebook spokesman Jonathan Thaw told Reuters that the company had no idea Yahoo filed a lawsuit until the media began publishing reports. "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," he said.

Yahoo's timing is no coincidence. Companies are typically more vulnerable to legal attacks when they're about to go public. The last thing they need is a financially draining, drawn-out litigation, thus companies in Facebook's current position are likely to resolve the issue quickly and move on. There's also a reported trend of lawsuits of this kind as of late: social networking companies accused of patent infringement right when they're moving through the IPO process. However these have typically been filed by patent aggregators who hoard them for licensing fees.

For its suit against Facebook, Yahoo has hired on Quinn Emanuel Urquhart & Sullivan to defend its case, the same law firm that Google and other manufacturers use in Android-related smartphone patent cases. Social gaming service Zynga is also another client who thus declined to comment on Yahoo's lawsuit.

According to Reuters, Yahoo stated last month that it was seeking licensing fees from Facebook over its patents -- fees that other companies have already agreed to pay. This is supposedly Yahoo's first offensive patent litigation against a large publicly traded company.

"Facebook's entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo's patented social networking technology," the lawsuit states. "Mr. Mark Zuckerberg, Facebook's founder and CEO, has conceded that the design of Facebook is not novel and is based on the ideas of others."

Out of the ten patents named in the lawsuit, only two are directly related to social networking technology. Most of the patent claims focus on online advertising including methods of preventing "click fraud," ad format (like Facebook's Premium Video Comment Ads), technology for customizing the information users see on a Web page and more. Yahoo even claims that Facebook's News Feed, the primary way of viewing friends' activity, infringes Yahoo's customization patents.

Yahoo's lawsuit also claims that a simple back-payment of royalties won't be enough to resolve the issue. "Yahoo is harmed by Facebook's use of Yahoo's patented technologies in a way that cannot be compensated for by payment of royalty alone," the lawsuit states. "Facebook's use of Yahoo's patented technologies has increased Facebook's revenue and market share because it does not have to recover the cost or time involved in the development of the technology."

If Facebook is indeed infringing upon Yahoo's patents, then the lawsuit could open the door to additional lawsuits with other companies. "If what Yahoo is saying is literally true, then it seems like a lot of companies would be liable," said Shubha Ghosh, a professor who specializes in intellectual property at The University of Wisconsin Law School. Of course, guilty verdicts would depend on whether an individual judge defines Yahoo's patents broadly or narrowly.

Kevin started taking PCs apart in the 90s when Quake was on the way and his PC lacked the required components. Since then, he’s loved all things PC-related and cool gadgets ranging from the New Nintendo 3DS to Android tablets. He is currently a contributor at Digital Trends, writing about everything from computers to how-to content on Windows and Macs to reviews of the latest laptops from HP, Dell, Lenovo, and more. 

  • billybobser
    'Patented technology'

    I assume that means they have actually copied the code in implementing their ideas.

    Else GTFO.

    You can't patent a fucking idea that anyone can have, given there are billions of people, it is entirely likely more than 1 person may have an 'idea'
  • wmalinowski
    Whoopiee..... Another patent lawsuit. That's all we needed.
  • Camikazi
    billybobser'Patented technology'I assume that means they have actually copied the code in implementing their ideas.Else GTFO.You can't patent a fucking idea that anyone can have, given there are billions of people, it is entirely likely more than 1 person may have an 'idea'Yea unless Facebook implemented this in the exact same way as Yahoo did then I don't see how they can sue. I can see suing if the code is identical but suing for a similar implementation of different code isn't right, the idea might be the same but the way to go about it are different and that is what is patentable the way you make it work not the fact that you thought it up.
  • jhansonxi
    Those who can compete, do. Those that can't, sue.
  • applerocks
    Wait shouldnt they be suing or be sued by Apple? I thought Apple had to be the plaintiff or defendant in all patent lawsuits now days.
  • aoneone
    yay, so the judge will rule in favor of yahoo; now facebook is a mess, yahoo never made it to the top, we are all going down the s- hole together! only in america! god bless the united states of america! dont forget to sue over the spilled hot coffee too k? ^_^
  • A Bad Day
    jhansonxiThose who can compete, do. Those that can't, sue.
    RAMBUS is an excellent model for those that can't compete...
  • jaber2
    Yahoo will win a peace of facebook, otherwise you can see facebook shut down. Go at it Yahoo, don't ket punks take your pattents and make money off them.
  • klavis
    So does this mean that Coca Cola can sue Pepsi for putting out a television commercial? This is just stupid.
  • upgrade_1977
    Funny how they wait until they are about to go public. Facebook has been around for years now, and now all of the sudden, yahoo wants a piece. Did yahoo "Purposefully" wait for them to be worth millions before they decided to sue? I like yahoo, but if your gonna sue, being strategic like this isn't suing for patent rights, it's suing exclusively to make money, and that just doesn't seem right to me. Like they knew facebook was gonna be huge, so they waited for facebook to do all the legwork, and now they want a piece of the pie.