Yahoo threatened to sue partner Facebook for intellectual-property infringement, spanning social networking, messaging, personalization and online ad patents.
In a classic
high-tech case of if-you-can't-beat-them-sue-them, Yahoo (NASDAQ:YHOO) Feb. 27
accused partner Facebook of infringing on patents related to social networking
and other technologies.
struggling to boost user engagement at a time when it is losing eyeballs to
Facebook, Google, Twitter and other Internet companies. Yahoo wants Facebook to
pay to use technology spanning 10 to 20 patents covering online advertising,
Website personalization and social networking, according to The New York Times
doesn't secure the licensing deals it wants, the company said it would sue
Facebook, which is girding for an initial public offering worth some $75
billion to $100 billion this year.
has a responsibility to its shareholders, employees and other stakeholders to
protect its intellectual property," a Yahoo spokesman said. "We must
insist that Facebook either enter into a licensing agreement, or we will be
compelled to move forward unilaterally to protect our rights."
to an already gutsy claim, Yahoo also took its gripe to The New York Times
around the same time it informed Facebook of its
complaint, according to the social network.
contacted us at the same time they called The
New York Times,
and so we haven't had the opportunity to fully evaluate
their claims," the Facebook spokesman said.
Yahoo has more
than 1,000 patents, many of which are valuable, according to one-time Yahoo
investor Eric Jackson, founder of Ironfire Capital.
last November that Facebook
is vulnerable to IP claims from Yahoo. The Internet company commands valuable
patents related to display ads, social networking, Inktomi's spider search
technology, processing unsolicited bulk email, transmission of multicast media
between networks, digital content management and data center management.
future revenue stream that its investors are counting on to help the company
overtake Google in market capitalization is virtually all derived from
. "It appears that a significant amount of that ad revenue will
infringe on Yahoo's paid search, display ad and social networking patents,
according to the contacts I've spoken to."
The news comes
just two-plus months after Yahoo augmented its content partnership with the
social network. Yahoo
in June 2010 began integrating
Facebook across more than 15 of its sites,
adding a much-needed social component to keep its 600 million-plus users
engaged and returning to its content.
enhanced that agreement in December 2011
, bringing the news activity
feature to 26 more Yahoo Web properties and adding a new notifications feature
to alert users to social conversations conducted across Yahoo Websites.
More than 12
million people have opted in to use the news activity feature, which lets users
share what they are reading about when users mouse over their Facebook profile
photo on Yahoo.
benefits from Facebook's social content, Facebook has gobbled Yahoo's display
ad market share the last few years. Facebook is one of the main reasons Yahoo's
U.S. display ad share has been nearly halved, from 20.8 percent in 2008 to 10.8
percent in 2011, according to eMarketer
threat, which resembles some of the dozens of patent-infringement claims lobbed
about in the mobile-computing space today, could be one of the ways new CEO
Scott Thompson plans to add some material health to Yahoo's bottom line.
suggested he wants to turn Yahoo into more of a technology company than an
online Internet power. Leveraging Yahoo's patent portfolio is one way to add
some sorely needed cash.