Facebook Buys 750 IBM Patents To Defend Against Yahoo

posted 3 hours ago

Josh Constine is a technology journalist who specializes in deep analysis of social products. He is currently a writer for TechCrunch. Previously, Constine was the Lead Writer of Inside Facebook, where he covered Facebook product changes, privacy, the Ads API, Page management, ecommerce, virtual currency, and music technology. Prior to writing for Inside Facebook, Constine graduated from Stanford University... → Learn More

FB vs Troll 2
FB vs Troll 2

Facebook has just bought some troll repellant in the form of 750 patents for networking, software, and other technologies from IBM according to Bloomberg. If Yahoo relies any of those technologies, Facebook could use the patents to counteract Yahoo’s patent infringement lawsuit against it.

The purchase means Facebook may be in less danger for now, but it doesn’t stop Yahoo from trolling other companies with its vague social networking and advertising patents.

Facebook was in danger of having to either settle with Yahoo or license the old tech giant’s patents to avoid uncertainty heading into its own IPO. It could have tried to invalidate Yahoo’s patents in court, but that case could have spilled over its IPO date and scared away investors.

Since Facebook is a young company, it doesn’t have as robust a patent portfolio as other big successful tech companies. It only had 56 issued and 503 filed patents in the US. With its IPO looming and an expected $100 billion valuation, Facebook was both vulnerable and a lucrative target. Yahoo’s opportunist lawsuit came at the worst possible time.

The IBM patent purchase will boost Facebook’s patent count over 800 in the US. By fighting fire with fire, it may be able to avoid a costly settlement or a plummeting post-IPO stock price. Instead it could come to a cross-licensing agreement with Yahoo or sue the old web portal in response if negotiations break down.

The bundle of patents from IBM could also help Facebook ward off other lawsuits. The company was targeted by 22 patent suits last year, and I’ve heard that Facebook paid to settle some of them. Meanwhile the sale will hardly dent IBM’s patent war chest, which grew by 6,180 last year alone. Patent sales are important business for the hardware company. IBM sold 1,000 to Google back in 2010.

Much of the tech industry railed against Yahoo for going on the offensive, and they’d probably prefer some sort of patent disarmament. Instead we’ve got a patent arms race and mutually assured destruction. Facebook likely shelled out big bucks for its new arsenal. Poorer startups may not have that option, and they could become Yahoo’s next targets.

Company: Facebook
Launch Date: February 1, 2004
Funding: $2.34B

Facebook is the world’s largest social network, with over 500 million users. Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard students. It was a huge hit: in 2 weeks, half of the schools in the Boston area began demanding a Facebook network. Zuckerberg immediately recruited his friends Dustin Moskovitz and Chris Hughes to help build Facebook, and within four months, Facebook added 30 more college networks. The original idea for the term...

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Company: IBM
Launch Date: 1896

IBM, acronym for International Business Machines, is a multinational computer technology and consulting corporation. The company is one of the few information technology companies with a continuous history dating back to the 19th century. IBM manufactures and sells computer hardware and software, and offers infrastructure services, hosting services, and consulting services in areas ranging from mainframe computers to nanotechnology.

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Company: Yahoo!
Launch Date: January 1, 1994
IPO: December 4, 1996, Nasdaq:YHOO

Yahoo was founded in 1994 by Stanford Ph.D. students David Filo and Jerry Yang. It has since evolved into a major internet brand with search, content verticals, and other web services. Yahoo! Inc. (Yahoo!), incorporated in 1995, is a global Internet brand. To users, the Company provides owned and operated online properties and services (Yahoo! Properties, Offerings, or Owned and Operated sites). Yahoo! also extends its marketing platform and access to Internet users beyond Yahoo! Properties through its distribution network...

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