Yahoo Seeks Patent Proof From Facebook
Struggling in popularity and revenue, Yahoo is trying a new tactic to get its face back into the spotlight. By way of e-mail, Yahoo threatened to sue the world’s largest social networking site, Facebook, for allegedly infringing on patent rights.
Yahoo seeks to discover the truth behind Facebook and whether some of its popularity stems from information and technology that the eight-year-old website stole from Yahoo, which launched in 1994.
“We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights,” Yahoo said in a statement.
The patent claims could cause trouble for Facebook, which is seeking to complete an initial public offering in the coming months.
At the start of 2012, Facebook had only 56 U.S. patents issued to its name. This number is very small in comparison to the likes of Yahoo as well as Google.
By comparison, Yahoo owns more than 1,000 patents. The company has not publicly identified which patents it believes Facebook is using, but the dispute boils down to 10 to 20 patents covering online advertising, messaging and other Internet services including social networking, according to an anonymous source who spoke to the New York Times.
Internet users can look at the latest tussle in two ways.
The first is that the latest claim adds to criticism of Facebook Founder and CEO Mark Zuckerberg who took ideas from other portals, a claim exposed in the 2010 movie, “The Social Network.”
The second is that it is Yahoo’s latest hope to piggyback on its more popular rival. Yahoo’s revenue has been steadily falling during the past three years while Facebook’s revenue has escalated from $272 million to $3.7 billion. Yahoo’s stock has not traded above $20 in over three years.
The time of the threat by Yahoo comes at no surprise. Facebook may be more inclined to work out a licensing agreement rather than risk a legal battle leading up to its anticipated stock market debut.
As of now, it is unclear how much Yahoo could make off of a potential deal, but shareholders are hopeful.
“As a shareholder, I am happy they are going after Facebook,” said Eric Jackson, a managing member of the Hedge Fund Ironfire Capital. “It’s a perfectly legitimate thing for them to do.”