Another Patent Infringement Lawsuit: Yahoo vs. Facebook 3

We learned last week that Yahoo has launched a patent infringement lawsuit against Facebook. Facebook is alleged to have infringed 10 of the more than a thousand patents Yahoo holds. Here is the list of the patents in question and some details.

The 10 patents in question touch on Facebook’s social networking concept, privacy controls, messaging function, advertising model and user customization capabilities. Indeed, nearly every aspect of Facebook as an online service is being challenged. This patent infringement lawsuit is so broad in scope that Yahoo claims that “Facebook’s entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo!’s patented social networking technology.”

This lawsuit highlights some of the criticisms of software patent that have emerged in recent years. Software patents are often defined very vaguely, capable of very broad interpretations, such that they may cover general broad concepts that multiple software developers can easily think of on their own. For example, Patent #5,983,227 “Dynamic page generator”, one of the 10 patents in this lawsuit, describes a process to dynamically generate web pages based on user preferences. According to the patent filing, this patent was intended to generate news web pages that display custom selections of stock quotes, news headlines, sports scores, weather, and the like. Yahoo alleges that Facebook’s News Feed and Wall infringes this patent. Given its breadth, almost every web service that allow users to customize web pages may be considered infringements of this patent. Software patents have been criticized on this ground that innovation in the software industry can be easily stifled if holders of such broad patents are to enforce them aggressively.

Some companies acquire patents, enforce them against alleged infringers and collect settlements and damages as their main revenue source. This has given rise to defensive patents. Companies attempt to accumulate large patent portfolios, by patenting their own works and acquiring additional patents, as a way to defend against patent infringement litigations. Even internet giant Google, while advocating for patent reform, admits that it has no choice but to join in.

With large patent portfolios, an infringement lawsuit can be dealt with by reaching cross-licensing agreements with the suing company. That is to say, the parties involved can agree to grant each other the right to use their own patented technologies. A defendant company that has a small patent portfolio would be at a great disadvantage. Facebook has merely 21 patents, according to the US Patent Office website. This week, Facebook has begun its effort to remedy this disadvantage with its purpose of 750 patents from IBM.

It remains to be seen how this clash between two internet giants will play out. In any case, this is one more illustration that the US patent system is in need of significant reform.

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