Facebook – the largest consumer brand online today – is being sued by internet portal firm Yahoo! for patent infringement. The lawsuit alleges Facebook stole Yahoo!’s patented technologies, including its news feed and advertising methods.
According to All Things Digital, the lawsuit covers 10 patents, including privacy, customisation, messaging, social networking, advertising and news feed.
The action comes just as new CEO Scott Thompson takes the helm of Yahoo! and the timing is interesting considering Facebook’s impending IPO.
A similar battle between Yahoo! and Google over Google’s acquisition of ads giant Overture resulted in Yahoo! settling days ahead of the IPO for several million shares.
The action is the latest in a maelstrom of patent lawsuits that are tearing Silicon Valley apart, but it is the first of its kind to rock the nascent social media space.
It is obvious that Silicon Valley is built on patents but the long-term impact of these kind of actions could be the stifling of innovation as innovators and entrepreneurs struggle to steer clear of patent attorneys and trolls.
In the suit, Yahoo! points out that Facebook was formed in 2004, 10 years after Yahoo! was founded, and alleges its growth was based largely on Facebook’s use of Yahoo!’s patented technology.
Yahoo! says that Facebook CEO Mark Zuckerberg has conceded the design of Facebook is based on others. It quotes him: “The thing that’s only been really surprising about the evolution of Facebook is – I think then and I think now – that if we didn’t do this someone else would have done it.”
Yahoo! further quotes him: “Getting there first is not what it’s all about.”
The portal firm then points out that it got there first in the areas of messaging, news feed generation, social commenting, advertising display, preventing click fraud and privacy controls.
Yahoo! then alleges that Facebook’s entire social networks model, which allows users to create profiles and connect with others is based on its patented social networking technology and says that prior to adopting Yahoo!’s technologies in 2008, “Facebook was considered one of the worst-performing internet sites for advertising.”
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