Facebook Responds to Yahoo With Own Patent Lawsuit

By Tech Wire Asia | 4 April, 2012

NEW YORK (AP) — Facebook is stepping up its patent dispute with Yahoo by filing its own lawsuit against the struggling Internet icon.

Facebook’s lawsuit Tuesday came just weeks after Yahoo Inc. claimed that Facebook violated 10 patents covering advertising, privacy controls and social networking. Facebook denied Yahoo’s allegations and accused Yahoo of violating 10 of its patents covering photo tagging, advertising, online recommendations and more.

The spat is escalating as Facebook prepares for an initial public offering of stock in the coming weeks. If all goes expected, Facebook could fetch as much as $10 billion, gaining a value of $100 billion. Yahoo, which has struggled amid competition from Google and Facebook, has a market value of about $18.3 billion.

There’s no immediate threat to either company’s services from the lawsuits. These disputes can take months or years to resolve and often lead to settlements in which companies agree to license patents to each other.

Facebook recently acquired 750 patents from IBM Corp. covering technologies that deal with software and networking. At the end of 2011, Facebook had just 56 U.S. patents, which was a relatively small number compared with other big tech companies. Yahoo owns more than 1,000 patents.

It was not immediately clear how many, if any, of Facebook’s claims involve patents from IBM. Facebook employees, including CEO Mark Zuckerberg, are listed as inventors of two of the 10 patents. A couple of the others date back several years before Facebook’s founding.

Facebook Inc., which is based in Menlo Park, California, filed the lawsuit in U.S. District Court in San Francisco. It is seeking a jury trial and unspecified damages, and for Yahoo’s suit to be dismissed.

Facebook said it has been “irreparably harmed” by Yahoo’s infringement.

“While we are asserting patent claims of our own, we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation,” Ted Ullyot, Facebook’s general counsel, said in a statement.

Facebook would not say whether it chose 10 claims to match Yahoo’s 10 and had no comment beyond the official statement.

Yahoo, which is based in Sunnyvale, California, said it had just received Facebook’s lawsuit. The company said the complaint appeared on its face “without merit and nothing more than a cynical attempt to distract from the weakness of its defense.”

“As we have made clear from the outset, the unauthorized use of our patented technology is unacceptable and must be resolved appropriately,” Yahoo said in its statement. “Other leading companies license these technologies, and Facebook must do the same or change the way it operates.”

Yahoo’s stock fell 28 cents to close Tuesday at $15.18.

Barbara Ortutay, Associated Press