When you become the most popular social network in the world, you can expect some attacks from competitors. It's the nature of the world today, and with all of the social network options offered, there's a whole lot of competition. Of course, we all know they are competing to overthrow giant Facebook, and on Monday, Yahoo cast a stone in the social media battle by filing a lawsuit in a CA district court.
Yahoo filed a complaint with the US District Court in San Jose, CA stating that Yahoo introduced the world to social media and was the mastermind behind such things such as instant messaging, click fraud prevention, social commenting advertising display, and news feed to name a few. As Facebook appeared ten years after Yahoo was launched and has since become the most visited social network site, Yahoo feels this wouldn't have been possible without implementing technology patented ages ago by Yahoo.
Yahoo also goes on to quote Facebook founder and CEO Mark Zuckerberg: “getting there first is not what it's all about.” The suit points out there would be no Facebook if it weren't for the technology Yahoo patented prior to Facebook even being an idea in Zuckerberg's head. Yahoo feels Facebook relies heavily on their technology which allows users to connect with other users or business pages..
Prior to the suit being filed, the two companies attempted to work it out. Yahoo requested licensing fees for the use of their technology and Facebook refused, even after the lawsuit was threatened. Other companies have already paid licensing fees for other patents, although the names of these companies have not been released by Yahoo. The damages Yahoo is seeking from Facebook have not yet been released. In all, Yahoo claims Facebook is infringing upon 10-20 patents held by Yahoo.
Neither company is cast in a good light in this situation: Zuckerberg is probably squirming nervously in his chair, wondering if the suit will affect the upcoming IPO being launched in May, an attempt to raise $5 billion, while Yahoo, not doing very well revenue-wise, appears desperate. However, it boils down to one simple fact: Yahoo owns the patents on the intellectual property they invented years before Facebook came along, so why shouldn't Facebook be required to pay licensing fees?
Whose Side Are You On?
These patent battles become more and more prevalent as technology improves, seemingly at the speed of light. Google lost $12.5 billion to Motorola Mobility last year in a similar suit, and a number of companies including Apple and Microsoft paid out-of-business communications equipment manufacturer Nortel to the tune of $4.5 billion for over 6,000 of the patents they owned.
IEEE Spectrum just last year ranked Yahoo's patents as most valuable of all communications and internet services, and certain investors feel Yahoo should go ahead and sue. With such a high number of patent infringements, Yahoo stands to collect quite the chunk of change from Facebook if the suit is decided in Yahoo's favor.