Business Technology

Friday 24 January 2020

Facebook sues Yahoo

Photo: AP
Photo: AP

Emma Barnett

Facebook is now suing Yahoo, in a reversal of a legal battle which began last month over a series of patents.

In March 2012, Yahoo began legal proceedings to sue Facebook over 10 patents upon which it claims the social network is infringing.

The lawsuit was filed in California and claimed that Facebook is infringing upon several patents owned by Yahoo, including patents on methods for advertising online.

However, Facebook has now responded and is counter suing Yahoo, claiming the internet company has violated its patents covering advertising, online recommendations and photo-tagging.

Yahoo has dismissed the new lawsuit saying it is “without merit”.

The web company, which owns around 1,000 patents warned Facebook at the end of February that it would take action if the social network did not enter a licensing agreement for the disputed patents. The firm said that other companies had already licensed the patents in dispute.

In a statement last month, Yahoo said: "Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court."

Facebook, which recently announced plans for a share offering that could value the company at $100bn, responded at the time by saying: "We are 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."

The social network has recently has bought a portfolio of 750 technology patents from IBM to help it counter allegations of intellectual property infringement.

The deal would significantly boost Facebook’s relatively small patent portfolio, which includes at least 56 issued patents and 503 applications.

The IBM deal could help assuage concerns that the company lacks the intellectual property it needs, said Erin-Michael Gill of MDB Capital Group.

“This is a very big deal,” he said. “Facebook is now where it’s supposed to be.”

In documents filed with regulators last month in preparation for its forthcoming stock market floatation, Facebook admitted that it is likely to face more legal attacks.

“We expect the number of patent and other intellectual property claims against us to grow,” it said.

“We may introduce new products, including in areas where we currently do not compete, which could increase our exposure to patent and other intellectual property claims.”

The legal spat between Yahoo and Facebook is expected to last years.

Yahoo was one of the stars of the dotcom era in the late 1990s but has struggled since the emergence of Google and Facebook. Its revenues have declined and in January the company appointed Scott Thompson, formerly of PayPal, as its new chief executive.

Patent disputes have made headlines in recent years, though these have mostly been hardware and software disputes between smartphone manufacturers.

Several social networking companies, including Facebook, have seen an increase in patent claims asserted against them as they move through the IPO process.

However, most of those lawsuits have been filed by patent aggregators that buy up intellectual property to squeeze value from it via licensing deals, and none by a large tech company such as Yahoo.

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