Written by: Mark Terry

The high-tech world is continuing its 20-way patent infringement war, but it’s not the usual suspects – it’s Yahoo vs. Facebook. Yahoo’s lawsuit claims that Facebook is infringing on Yahoo’s social networking patent (US7599935), which may be the basis of Facebook’s networking platform. As of late, the superstar high tech companies have been aggressively taking it to their competitors to protect their current revenue streams, but also, more importantly, to secure a dominant position in the future.

Yahoo, which has been struggling over the last three years, recently lost ground to Facebook in the online advertising market. There is no doubt that the battle for online advertising is intense and there may not be enough room for all of the current players. Online advertising is extending into the smartphone phone industry, which is one of the motivators behind the 20-way mobile patent war including Microsoft, Apple, Google and Motorola. Control over the internet, cell phones and television (set top-box wars coming soon) is the ultimate goal. Yahoo, which holds about 1,100 patents, is suing Facebook, which holds about 56 patents, over ten Yahoo patents on the eve of Facebook’s IPO. Recall that about ten years ago, Yahoo sued Google just before its IPO and settled for Google stock, which was eventually cashed in for $200M.

Is Yahoo being smart about enforcing its patents at this point in time or are they just playing dirty in order to squeeze money from Facebook before its IPO? Why did Yahoo wait until now? If their social networking technology is so good, then why didn’t Yahoo get into the social networking business? Maybe the founder of Yahoo and the last Yahoo CEO missed the social networking boat and now the new CEO is playing catch up. Perhaps Yahoo was looking for a nice pay day if they get a similar result as the one they did with Google (though it may take a couple of years). In any case, one can see that there are a myriad of factors and parties that must be considered when enforcing patent rights – not the least of which are the financial or monetary considerations.

Mark Terry is a registered patent attorney practicing in South Florida and Washington D.C. for over 10 years.