The Blame Game: Intellectual Property Analysis of Yahoo! v Facebook v Yahoo! v Facebook
On April 27, 2012, in response to Facebook's counterclaim, Yahoo! asserted two additional advertising patents against Facebook. Yahoo! also asked for invalidation of the asserted Facebook patents, and claimed most of the patents were bought from non-operating entities for the purpose of retaliation. Both parties may be interested in knowing that neither was the first to the online advertising race, as there are thousands of patents, with tens of thousands of similar claims, that overlap Yahoo!’s recent patent assertions.
Breaking News! Patents can be bought from non-operating entities and later asserted; continuation patents can be abused , and two patent applications can include the exact same wording and eventually be issued.
In other news, the sky is still blue and gravity is still in effect.
These are many of the issues Yahoo! focused on in its latest complaint against Facebook. In addition to asserting two additional online advertising patents against Facebook, Yahoo! contends that most of the patents were bought from non-operating entities for the purpose of retaliation, and that some of the asserted Facebook patents are “tainted by inequitable conduct,” which includes “intentional failure to name a known inventor” and “intentional deception of the PTO regarding the addition of new material.”
We’d like to commend Yahoo! for reiterating the very information we discussed in our previous report on Facebook’s counterclaim. In that report, we laid out the assignment history of each of the Facebook patents asserted, and specifically mentioned the patents’ previous assignments to non-operating entities. We also focused in depth on the examination history of US 8,150,913 – the continuation patent Yahoo! says included “intentional deception of the PTO”.
We would also like to point out that Facebook’s acquisition and assertion of third-party patents should come as no surprise, considering Facebook’s backfilling strategy, including the approximately 1,400 patents Facebook recently acquired from Microsoft and IBM in the past two months. The Microsoft transaction was for a portion of the AOL portfolio that Microsoft had acquired on April 9, 2012. Microsoft then instantly turned around and sold part of the portfolio to Facebook for $550 million – which should have us all pining for those nostalgic days of Microsoft’s love affair with U.S. and European anti-monopoly mavens and the antitrust-sensitive radar of all market participants, most notably the U.S. Department of Justice. Given that the anti-trust division of the DoJ seems to require collusion (not merely single Sherman Act violations) before they enforce the law, the fact that Facebook mysteriously valued undisclosed patents at precisely ½ Microsoft’s purchase price may actually wake them up to an opportunity to investigate if two corporations collaborated on a price that harms competition. That transaction is perhaps best seen as Facebook acquiring defensive objects intended to dampen incentives for adversaries to litigate against it, not assets to be deployed to enable new business not yet contemplated by Facebook.
Yahoo! itself is not above asserting acquired patents. In fact, three of the patents Yahoo! initially asserted against Facebook were previously owned by Overture Services, and the newly asserted patents are continuations of (i.e. spring from) previous Overture patents. In addition, nearly 200 of Yahoo!’s 1,172 US patents as of May 1, 2012 were originally assigned to other entities, including IBM, Overture Services, Digital Equipment Corporation and Digital’s former AltaVista division.
With this recent trend of acquiring as many patents as funding allows, the real question should not be who owns the biggest patent arsenal, but who is actually doing the innovating – the original patent holders, the buyers of these patents, or third parties whose works have been conveniently overlooked? In addition, is this behavior improper patent pooling, a Sherman Act violation? Judging by the recent announcements regarding the retention of “competition counsel”, it appears that at least some of these parties know that there’s reason to seek guidance and potential down-stream representation.
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