Business, Finance & Economics

Yahoo sues Facebook over 10 patent infringements


Facebook CEO Mark Zuckerberg announces Timeline as he delivers a keynote address during the Facebook f8 conference. Yahoo! is suing Facebook over 10 alleged patent infringements, in the first social media-related lawsuit between two major tech companies.


Justin Sullivan

LOS ANGELES — Yahoo is suing Facebook over ten alleged patent infringements, in the first ever social media-related legal battle among big technology companies, Reuters reported

Yahoo's patent lawsuit, filed Monday in San Jose, California, comes on the heels of Facebook's announcement of plans for an initial public offering valued at about $100 billion, according to Reuters. 

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In the lawsuit, Yahoo! says Facebook was considered "one of the worst performing sites for advertising" before using Yahoo!'s original ideas. 

Yahoo alleges that Facebook infringed on several of its' patents, using Yahoo!'s ideas to develop its newsfeed, advertising model, messaging system, pages, and groups, the Wall Street Journal reported. Yahoo has over 3,300 patents and published patent applications, while Facebook has just 160, Reuters reported. 

"Mr. Mark Zuckerberg, Facebook's founder and CEO, has conceded that the design of Facebook is not novel and is based on the ideas of others," the lawsuit said, according to Reuters. 

"We're disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation," said Facebook spokesman Jonathan Thaw, adding that the company learned of the lawsuit through the media, Reuters reported.

"The wide nature of these patents, and the limited way that Yahoo itself leveraged them, has tagged Yahoo with the least lovely handle in the tech world: 'patent troll,'" wrote Wired reporter Tim Carmody. "Even if it’s also doing anything and everything it can to pull together as much value for its shareholders, the blowback at Yahoo’s audacity could be tremendous. Especially if the lawsuit fails." 

After announcing the lawsuit Monday night after the market had closed, Yahoo's stock value dropped 0.4 percent on Tuesday to $14.43, The San Jose Mercury News reported.

Yahoo's stock value has been a touchy subject for the company since it refused a $44.6 billion buyout offer from Microsoft in 2005, the Mercury News reported. Microsoft valued Yahoo at $33 a share, a level it has never again approached. 

More from GlobalPost: Yahoo board: Four directors leave in shakeup

Facebook's looming IPO puts the company in a vulnerable position for a lawsuit, according to Reuters. 

"As a general proposition, when a company is about to go public, the last thing it needs is to get involved in a knock-down, drag out litigation fight," said Colleen Chien, a professor at Santa Clara Law in Silicon Valley. "So that might make Facebook more willing to resolve its differences with Yahoo."

This is not the first time Yahoo has taken advantage of a major technology company's soon-to-be IPO status. In 2004, it sued once-partner Google shortly before its' initial public offering, Wired reported. Google settled for lucrative stock in Yahoo. 

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