Facebook Fortifies Defenses, Buys 750 Patents From IBM
The best offense is great defense, and Facebook is taking up 750 patents-worth of defensive linebackers from the grandfather of information technology, IBM. Social networking heavyweight Facebook is facing several lawsuits for patent infringement in the wake of its initial public offering (IPO) announcement. Facebook’s IPO is expected to generate over $100 billion for Mark Zuckerberg and company.
Yahoo filed a patent infringement suit Monday last week for Facebook’s unlawful use of their advertising, privacy, customization, social networking and messaging patents.
Last Friday, communications solutions provider Mitel filed a lawsuit against Facebook for infringing on its “Automatic Web Page Generator” and “Pro-Active Features for Telephony” patents.
Social media advertising provider Compass Labs and Internet services and media giant AOL look like they want to join the melee and cash in on their patents as well.
Compared to Yahoo’s 3,300+ patents and applications, Facebook only owns 56 issued patents and 503 applications, so the 750 patents (tech-based, ranging from search to semiconductors) from IBM gives much needed breathing room. Neither Facebook nor IBM disclosed the value of the transaction, but analysts say the hundreds of millions it cost is worth every cent. Facebook anticipated patent lawsuits as early as last month.
We expect the number of patent and other intellectual property claims against us to grow. 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.
As Tony Bradley of PCWorld wrote about the frivolousness of patent litigation:
(It) is a theater of the absurd in most cases, but it has evolved into a standard business practice among tech companies… When it comes to patents today, though, is any of it really unique or innovative anymore? Tech patents seem to be predominantly vague and over-reaching. The intent is to be ambiguous enough in defining what exactly the patent is that you can apply it to virtually anything in the event that you choose to instigate a patent infringement lawsuit, or end up needing to defend yourself against one.
The US justice system is no stranger to absurd or frivolous lawsuits (Google “absurd lawsuits”, you’ll see what I mean), but in Facebook’s case the potential for profit is very tempting. As a company filing for IPO, Facebook needs to resolve all cases before it becomes publicly listed for trading. That, or counter-sue and manage a deadlock, impasse or dismissal.