After numerous threats, Yahoo! has sued Facebook for infringing on 10 of its patents, in what many are calling a bald-faced attempt to jockey more shares of the company's IPO into their own pockets.
The patents in question are broad in scope, covering many common practices seen in internet corporations today. Challenging accepted conventions like messaging, privacy, advertising and social networking, it seems as though Yahoo! is claiming they invented the whole internet.
The company is floundering. Certainly in comparison to Facebook, who boasts 850 million users and is being valued at $100 billion. And right now their plan seems to be to sue more popular companies in lue of coming up with new innovations themselves.
They've done it before. Yahoo sued Google in 2004 over patents it bought in its acquisition of Overture. Then they settled just before the IPO release for millions of shares. Now they plan to do the same thing with Facebook
The plan may backfire, however. Facebook may not hand over its shares so easily and has stated their disappointment with their business partner Yahoo!:
“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. Once again, we learned of Yahoo’s decision simultaneously with the media. We will defend ourselves vigorously against these puzzling actions.
Making enemies with a company that is far exceeding your own in innovation and profits may not be the only way this suit can backfire. Yahoo! likely doesn't have a lock on it's patents. The U.S. Patent office often hands out overlapping patents for even minor tweaks in design. The big companies like Google, Amazon and Microsoft all have patents that overlay each others.
Speaking of Microsoft, Facebook may call in the big dog in its defense. The company owns the rights to over 20,000 patents; odds are many of them overlap with Yahoo!'s. And apart from owning shares in Facebook, they are also a strategic business partner. Bing uses social data from Facebook in search results. Facebook uses Skype for video calling.
It's all up in the air right now, Facebook certainly has viable options for getting out of this and saving face. They may have to give up shares just to move forward with their IPO. Then again, they may get Microsoft backing and try to squeeze them out.