Yahoo Sues Facebook Over 10 Patents

March 12, 2012

After threatening Facebook with patent litigation last month, Yahoo has pulled the trigger, charging Facebook with infringing ten of its patents:

To build a successful website, users need to have easy access to many functions and tasks such as messaging and privacy options. The website owner needs revenue through functions such as advertising. All of these functions involve Yahoo!'s innovations. Without Yahoo!'s achievements, websites such as Facebook would not enjoy repeat visitors or substantial advertising revenue.

According to sources who talked to All Things Digital, Yahoo's increasingly litigious posture is being driven by recently hired CEO Scott Thompson.

Yahoo claims Facebook infringes patents related to online advertising, privacy, Web customization, social networking, and messaging.

Yahoo's complaint does not allege that Facebook directly copied Yahoo's products. Rather, Yahoo appears to have claimed broad categories of website functionality, which Facebook may have infringed by accident in the process of building its own website.

For example, Yahoo accuses Facebook of infringing Patent no. 7454509, "Online playback system with community bias." While the patent is written in dense legalese ("A method comprising providing a first community having members, each member of the first community having associated preferences regarding data stream content..."), it appears to claim the concept of serving up customized content to different users in a social network based on their individual preferences.

Another patent, originally granted to Overture (which Yahoo acquired in 2003), appears to cover the concept of arranging the advertisements on a webpage based on past click-through rates.

The lawsuit illustrates how patents are becoming a significant barrier to entry for new firms in the software industry. Given how many patents Yahoo has, and how broad they are, it's hard to see how Facebook could have avoided infringing them. And, of course, Yahoo is far from the only software incumbent with a large portfolio of broad patents.

But until recently, there was a tacit agreement among major software firms not to sue competitors for patent infringement. All firms recognized that a full-scale patent war would be ruinous for the industry. But that gentlemen's agreement began to break down in the heat of competition in the mobile market. And now the patent wars seem to be spreading beyond the mobile market to the software industry more generally.

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