Florida Patent Lawyer Blog

The high tech world is continuing its 20-way patent infringement war, but it's not the usual suspects - it's Yahoo vs. Facebook. Yahoo's lawsuit claims that Facebook is infringing on Yahoo's social networking patent (US7599935), which may be the basis of Facebook's networking platform. As of late, the superstar high tech companies have been aggressively taking it to their competitors to protect their current revenue streams, but also, more importantly, to secure a dominant position in the future.

Yahoo, which has been struggling over the last three years, recently lost ground to Facebook in the online advertising market. There is no doubt that the battle for online advertising is intense and there may not be enough room for all of the current players. Online advertising is extending into the smartphone phone industry, which is one of the motivators behind the 20-way mobile patent war including Microsoft, Apple, Google and Motorola. Control over the internet, cell phones and television (set top-box wars coming soon) is the ultimate goal. Yahoo, which holds about 1,100 patents, is suing Facebook, which holds about 56 patents, over ten Yahoo patents on the eve of Facebook's IPO. Recall that about ten years ago, Yahoo sued Google just before its IPO and settled for Google stock, which was eventually cashed in for $200M.

Is Yahoo being smart about enforcing its patents at this point in time or are they just playing dirty in order to squeeze money from Facebook before its IPO? Why did Yahoo wait until now? If their social networking technology is so good, then why didn't Yahoo get into the social networking business? Maybe the founder of Yahoo and the last Yahoo CEO missed the social networking boat and now the new CEO is playing catch up. Perhaps Yahoo was looking for a nice pay day if they get a similar result as the one they did with Google (though it may take a couple of years). In any case, one can see that there are a myriad of factors and parties that must be considered when enforcing patent rights - not the least of which are the financial or monetary considerations.

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Bullying amongst children and teenagers - a hot topic lately - has also recently played out in the business world. Microsoft and Apple have recently filed a complaint against Motorola (soon to be owned by Google) over unfair competition in the EU. The complaint states that Motorola's aggressive enforcement actions and high royalty fees are hindering market competition. These tech giants are battling over the use of patents related to technologies necessary to connect wirelessly to the internet and to stream video. Is Motorola being a bully or are they engaged in a legitimate enforcement of patent rights?

As of late, large technology companies are taking aggressive action to protect their patents by stopping competitors from selling products that are in their patent space. Microsoft and Apple have stated that the royalty fees offered by Motorola are way to high and therefore unfair. The argument in favor of Motorola is the free-market argument. The free market says that companies should be able to sell their technology at whatever price they desire or to charge any royalty they like. The consumers will decide whether the products, and the royalty rates, are worth what Motorola is asking. The argument against Motorola is the fair competition argument. How can competitors freely compete when Motorola has a monopoly on a particular product or space? How can consumers benefit from price competition when there is only one seller of a particular good or service? Whatever side you take, it is important to know that the parties involved - Microsoft, Apple, etc. - have all been on both sides of the argument at different points in time.

Tech companies spend a lot of money creating new technologies and obtaining patents to protect them. Money and finances are the main motivators behind these activities. But when it comes to enforcement of patent rights, there are various additional factors that must be considered. Some of those factors include the cost of the lawsuit, fair competition, the risk of a counter suit, anti-trust, public relations and business relationships. In light of the currently-ongoing 20-way mobile patent wars, tech companies may be wise to weigh all of the aforementioned factors before getting involved in a drawn out fight.

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