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Yahoo sues Facebook in patent battleMar 13, 2012 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) -- Yahoo (YHOO) filed a federal patent lawsuit against Facebook on Monday, in a sign the recent wave of big-money licensing disputes in the wireless sector may be spilling into other segments of the tech industry. The lawsuit comes after Yahoo confronted Facebook last month with a demand that the social networking giant pay royalties for using Web technology that Yahoo says it invented. While the suit doesn't specify a damage amount, experts said Yahoo could be seeking a significant slice of Facebook's growing advertising business, which produced $3.15 billion in revenue last year. Yahoo's ad sales have slowed in recent years and CEO Scott Thompson is under intense pressure to develop new sources of revenue. The demand also comes at a delicate time for Facebook, which is planning its first public stock offering this year and wants to assure regulators and potential investors that the business is healthy and secure. According to the research firm eMarketer, Facebook recently overtook Yahoo as the market leader in online display advertising. Legal experts say the suit represents a new front in recent patent warfare. In recent years, a number of established tech companies have gone to court over technology used in the fast-growing smartphone market, as part of a high-stakes battle for market dominance between software platforms created by Apple (AAPL) and Google (GOOG). Patent lawsuits have been less common in other sectors, such as social networking, other than cases involving so-called "patent trolls," or companies whose primary business is buying up patents and collecting royalties. But with big money at stake, an increasing variety of tech companies may be exploring new ways of making money from their intellectual property, according to Colleen Chien, a patent expert and assistant professor at Santa Clara University School of Law. "These discussions are happening now," she said. In dueling public statements Monday, Facebook said it was "disappointed" to learn of the lawsuit, while Yahoo said it felt "compelled" to press its claims in court. Yahoo said in the suit that it spends hundreds of millions of dollars each year to develop new technology for its business. While Facebook has become one of the most widely visited sites on the Internet, Yahoo said that growth "has been based in large part on Facebook's use of Yahoo's patented technology." In the 19-page document, filed at the San Jose federal courthouse, Yahoo said Facebook has infringed 10 patents that Yahoo obtained over the past decade for software used to create and sell online ads, as well as for technology used in online messaging, customizing content for individual website visitors and protecting visitors' privacy. Before adopting Yahoo's methods in 2008, the suit contends, "Facebook was considered one of the worst-performing Internet sites for advertising." The suit also argues that Yahoo has suffered "irreparable harm" by losing a share of the advertising market to Facebook while the latter was "free riding on Yahoo's intellectual property." Along with financial damages, the suit asks for a court order to block Facebook from using Yahoo's inventions. Yahoo made similar patent claims against Google in 2004, settling the dispute with a licensing agreement that gave Yahoo shares in Google before the latter went public. Facebook and Yahoo, meanwhile, have cooperated in the past on projects that steered Facebook visitors to Yahoo sites and allowed users to share information from both platforms. "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 representative said. "We will defend ourselves vigorously against these puzzling actions." Mercury News staff writer Jeremy C. Owens contributed to this report. Contact Brandon Bailey at 408-920-5022 or follow him at Twitter.com/BrandonBailey. ___ (c)2012 the San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com Distributed by MCT Information Services |