Yahoo! Sues Facebook over Patents

Guest Post Written By: Brian Finnegan, Austin, TX

Yahoo Inc. has filed a lawsuit against Facebook that alleges their entire business model infringes upon 10 of Yahoo’s patents. The most widely quoted excerpt from the lawsuit says, “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." Yikes! This is sure to cause some massive ripples in the tech world, and comes at a crucial time for Facebook with its looming IPO. I have always found the intersection of tech, law and sometimes politics to be fascinating and I hope this case will not disappoint. 

The Wall Street Journal reported that Facebook is hoping to raise 10 billion dollars with it’s IPO and that the total worth of the company could be between 75 to 100 billion dollars.  All those zeros equal a big incentive to get this settled fast. The big question in my mind is, “What does Yahoo want out of this?”   

I seriously doubt they are going to try and block Facebook from continuing operations, so they are likely looking for either shares of the stock, or a cash settlement. They most definitely have their proverbial hand out, and would very much like a slice of the pie, please and thank you.

If Yahoo is successful in their lawsuit, how many other companies can they go after?  I’ll bet companies like Google, Twitter, Foursquare, etc. are going to be watching this case very closely.

This case also highlights what's wrong with the patent system with regards to software innovation. It just doesn’t seem like creating user profiles to interact with each other should be patentable because its way too broad. It’s just people connecting with people which seems built into the very fiber of the Internet, dating back to the origination of email and the early AOL days. Longer if you want to get technical, as the Internet was always about connecting people. That sort of connectivity just plain does not belong to Yahoo, it belongs to the world.   

That’s my take anyway, we’ll see what the judges say.