Just two weeks after Yahoo! revealed that it had threatened Facebook with legal action over its alleged misuse of 10 patents, the ailing online firm pulled the trigger: This week, Yahoo! sued Facebook for patent infringement.
"Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court," a Yahoo! statement notes.
"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," a Facebook statement retorts.
OK. But what are the facts?
Yahoo! had previously said it approached Facebook about obtaining licensing fees for what it claimed were 10 to 20 patented technologies that Facebook was using but not paying for. Facebook demurred, and Yahoo! went public with its threat to sue Facebook if the firm didn't comply.
Yahoo!'s threat not coincidentally came in the build-up to Facebook's still-pending initial public offering (IPO), and many feel that it was timed specifically so that Facebook would simply pay up to make the issue go away during such a sensitive time. It had previously threatened Google during that firm's IPO quiet time in 2004; Google ended up paying over $200 million to license Yahoo!'s patents.
That said, the Google of 2004 was a relatively small company at the time of that action. Today, Yahoo! faces a much bigger and well-funded foe in Facebook, relatively speaking.
The Yahoo! complaint lists several patents related to online advertising and two, interestingly, for social networking services. The patents are generally considered pretty broad, meaning that many online companies would technically be liable, assuming the patents are valid.
According to wire reports, most firms that are sued for patent violations counter-sue. But Facebook owns only 160 patents, compared with Yahoo!'s well stocked patent portfolio, which contains more than 3,300. Combined with Facebook's non-typical way of doing things, its next course of action is a bit unclear.