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Category: WTO Sub-category: Intellectual Property
Document type: news
Yahoo is accusing Facebook of infringing on its patents and threatening to sue if the world's largest social network doesn't agree to pay licensing fees to them.
The two companies spoke on 27th February, 2012 to discuss this issue. Yahoo accuses Facebook of infringing on up to 20 patents related to the social aspects of features such as privacy controls and advertising. Facebook, which presently has more than 800 million users worldwide, said in an emailed statement that it's still looking through Yahoo's demands.
A Facebook spokesperson said that Yahoo contacted them at the same time they called a local newspaper so Facebook didn't have the opportunity to fully evaluate their claims.
Yahoo said in a statement that it has a responsibility to its shareholders, employees and other stakeholders and to protect its intellectual property. They have invested substantial resources into these innovations and recognizing that, other major web and technology companies have already licensed some of these technologies. Now, they insist on either Facebook to enter into a licensing agreement with them or they will be compelled to move forward unilaterally to protect their rights.
Intellectual property battles are relatively new for Facebook, but likely to ramp up as the social networking company currently holds only 56 patents protecting its technology. It has filed more than 410 US patent applications in the past 18 months. Moreover, Facebook is preparing for its initial public offering that is expected to take place in May 2012 and be worth as much as $5 billion.
Yahoo, however, has talked up the value of its more than 1,000 patents late last year, amid a strategic review that included potentially selling a stake to outside investors.
It is unclear how much money Yahoo could wrangle out of any potential agreement with Facebook.
It should be noted that last year, IEEE Spectrum, a technology publication, rated Yahoo's patents as the most valuable among those for communications and Internet services. Some investors believe that Yahoo's intellectual property could give the company ammunition against Facebook.
However, for Yahoo, intellectual property battles are not completely new. In 2004, ahead of its IPO filing, Google had settled with Yahoo a dispute over patent infringement claims relating to targeted ads placed next to search-engine results. The settlement resulted in Google giving Yahoo 2.7 million shares of its stock, which at that time, before the IPO, were believed to be worth as much as $365 million.
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Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license.
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