Facebook in a tough position, experts say

March 14, 2012

Many in the technology community have used the discussion over Yahoo’s suit against Facebook to revisit the debate over the effectiveness and validity of technology patents.

In a post on Wired, programmer Andy Baio wrote a bit about the patent process from the programmer’s point of view — and it’s not favorable. Baio said that, with regret, he agreed to work with Yahoo to apply for patents on some of the technology that he developed for them. He said Yahoo assured him they would be purely defensive.

“I thought I was giving them a shield,” Baio wrote. “But turns out I gave them a missile with my name permanently engraved on it.”

He said that even if the patents were meant to be defensive, he should have realized that a patent portfolio means different things in the hands of different people. Baio doesn’t have any patents named in the Yahoo lawsuit, but said that one of patents is “so abstract” that it could cover any activity feed such as the Facebook News Feed.

Venture capitalist Mark Cuban, an outspoken opponent of technology patents, said that he’s actually hoping that Yahoo’s patents are proved valid, so that they’ll stand as an example to the rest of the industry.

“It is the only way that consumers will realize what is at stake with patent law as is,” Cuban wrote on his personal blog.

Meanwhile, legal experts are picking apart the strategy behind the suit.

Intellectual property attorney Lance Lieberman said that Yahoo would be “crazy” not to try and leverage the patents they have, and that Facebook — preparing for its initial public offering, expected this spring — is an obvious target.

“Yahoo is looking to monetize what they’ve got,” said Lieberman, an attorney at the New York-based firm Cozen O’Connor. “The endgame is to get something for them, whether in a settlement or a judgement.”

He added that Facebook is in a difficult position not only because it will want to clear up any big litigation in advance of its market debut, but it also doesn’t have a lot of ammunition with which to fight back.

“There’s been some talk as to whether or not Facebook will talk about licensing, but Facebook has just a handful of patents to cross-license back. I doubt [Yahoo will] have much use for those patents.”

In an e-mailed message, Alexander Poltorak of the General Patent Corporation said that Facebook is likely to focus its defense on saying that Yahoo’s patents are invalid.

But while Yahoo has some fairly broad patents in the asserted portfolio, Poltorak said, he said that the company has a shot at winning this lawsuit.

“Of course, the goal is likely not to take this case to trial but to settle licensing these patents to Facebook for a substantial payment,” Poltorak said. “Facebook is preparing for an IPO, and this lawsuit creates an unwelcome uncertainty. Facebook will likely want to settle this as quickly as possible.”

Related stories:

Wonkblog: Yahoo sues Facebook. Are software patents out of control?

Yahoo goes after Facebook at a vulnerable time

Survey: Google’s search engine becomes more popular despite perceived intrusions into privacy

Hayley Tsukayama covers consumer technology for The Washington Post.
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