Yahoo Sues Facebook; Stoops to New Lows

Last month, we saw a report that Yahoo was planning to sue Facebook for the patent infringement of some trivial patents related to website personalization, social networking and messaging. Well, it pulled the trigger yesterday, and actually slapped Facebook with a massive patent infringement lawsuit, claiming that Facebook’s News Feed, advertising methods and privacy settings infringe on its patented IP.

Since Yahoo was one of the first companies to the internet party, it has been able to build a significant patent portfolio in the more than 15 years that it has been operating in. Facebook is relatively a newborn, and hardly has any patents to defend itself with.

The move was apparently driven by Yahoo’s new CEO, Scott Thompson, and is being opposed by many of the top techies working at Yahoo.

The timing is perfect for Yahoo, and very unfortunate for Facebook, as it is just a couple of months away from an IPO. Yahoo has done this exact same thing in the past, right before Google’s IPO, and managed to settle days before the IPO with millions of Google shares.

Apparently, Yahoo is trying to repeat that, and hopes to make a bigger killing this time. I wouldn’t really blame Yahoo – it’s just trying to maximize shareholder returns. What’s at fault here is the archaic patent system of the U.S., which really needs to be fixed soon, if it really intends to foster innovation and not crush it.

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