Yahoo threatening Facebook with first-ever lawsuit over social media patents

yahooWe have sat through talk after talk about Yahoo’s potential sale to this company or that company, but in its bid to stay relevant among its competitors, has Yahoo gone too far? According to The New York Times, Yahoo may be seeking legal action against Facebook in what may play out as the first-ever battle over social media patents.

On Monday, representatives from Facebook and Yahoo discussed the 10 to 20 infringing patents in question over an undisclosed meeting. Yahoo intends on taking Facebook to court if the social networking giant refuses to comply with Yahoo’s demand to license its social media patents.

Among these patents are features of social networking platforms that many utilize today, including Website personalization, social networking and messaging, newsfeed privacy controls, and advertising.

Yahoo can now be added to the hoards of “patent trolls” that have taken over the digital landscape in recent years. 

“Yahoo has a responsibility to its shareholders, employees and other stakeholders to protect its intellectual property,” Yahoo explained to The New York Times.

Yahoo has been holding onto a treasured arsenal of patents, ranked by the IEE Spectrum as the most valuable patents in 2010 among communication and Internet services. Google followed in second place, while Facebook was nowhere to be found on the list of the top 20.

We were able to discover a couple of patents that may be among the ones included in Yahoo’s discussion with Facebook. The technologies in question are, “Social Network Based Online Advertising,” a technique that targets an advertisement in a social network to a secondary user, based on a primary user’s habits,” and “Social Impact on Advertising,” a technique that allows advertisers to track the efficacy of their advertisements using analytics.

The threat of a patent battle comes at a time after Facebook had announced its $75 to $100 million IPO. Back in August 2004, during the same month of Google’s IPO announcement, Google decisively settled the 361 patent suit Yahoo had filed against the search giant. The result of the suit was Google’s agreement to license Yahoo’s patent, in addition to a remuneration of 2.7 million shares of Google. The final value of the settlement was $229.5 million (of which $28.5 million was spent on licensing the disputed Yahoo patent).

With the eve of Facebook’s IPO we should expect Yahoo to seek a percentage of Facebook’s stock.

While Yahoo holds patents in multiple sectors, including “Social Aggregation Targeting Communications,” a patent for targeted mobile advertising particular to an event or gathering, the threat to the current and next generation of innovative Internet entrepreneurs is very much a reality. The patents in question are applicable not only to Facebook, but also to Google+, LinkedIn, and other  burgeoning social networking platforms.

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