Facebook and Yahoo! Declare a Truce on Patent War

Yahoo! drew first blood last March by filing a patent infringement case against Facebook. The social networking giant bought 750 patents from IBM and counter-sued Yahoo! last April. Now both parties seem ready to talk it out. Yahoo! lawyer Kevin Smith said they petitioned U.S. District Judge Jeffrey S. White in San Francisco for a two-week extension to allow them further room for negotiations.

The parties are currently engaged in settlement negotiations to resolve this dispute. The parties believe that a further extension will facilitate settlement.

Yahoo! sought licensing fees from Facebook for its patents, saying other companies complied with their licensing deals. The ageing company said Facebook did not pay licensing fees for:

• Advertising patents that help generate ads personalized for users.
• Privacy patents that allow users to customize how their information is shared.
• Customization patents for tailoring browser experience based on users’ needs and interests.
• Social networking patent allowing users to customize personal information and join groups with similar interests.
• Messaging patent combining e-mail and instant messaging on social networking sites.

Yahoo! asked for Facebook to pay triple damages plus all of their legal costs. Yahoo! also asked Facebook to stop infringing on its patents.

The social networking behemoth took time out of its IPO preparations to buy 750 patents from IBM to beef up its war chest, then filed a counter-suit against Yahoo!, saying the ailing Internet company infringed on the following:

• Personalized activity feed stories
• Tagging digital media
• Headline posting
• Fetching and displaying search results
• Customizing profiles
• Dynamic profiling
• Profile privacy rules

TechCrunch writer Josh Constine wrote an excellent piece on how Facebook’s lawsuit beats Yahoo’s claims hands down.

Yahoo! added a few more patents to its list, but Facebook did not respond to that addendum, saying Yahoo’s claims were “erratic and perplexing.” At the time Yahoo filed its lawsuit, the company was headed by CEO Scott Thompson. Thompson came under fire for laying off 2,000 employees in April (causing several executives to resign), raising speculations on his eventual ouster this May. His questionable academic records and thyroid cancer diagnosis may have contributed to Thompson leaving the ailing Internet company after 130 days in office.

While representatives from both companies are declining to comment on the truce, the 10 August schedule will give Facebook and Yahoo! ample time to iron things out and come to an amicable settlement. Facebook still has an ongoing tussle with communications solutions provider Mitel, and its stock price is on the rocks following the weak reception to its IPO. The company also recently settled an anti-trust case for US$10M for publishing users’ likes on advertisements without compensating them or giving users the option to disable the feature.

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