Facebook is in federal court in the U.S. facing down a lawsuit from Yahoo, which claims the social media platform is infringing on multiple online ad and info sharing patents.
Lawyers for Yahoo, in a complaint filed today in federal court in San Jose, Calif., seek a court order barring Facebook from infringing 10 patents and awarding it triple damages. The patents cover website functions that include advertising, privacy protection and messaging, according to the complaint.
Yahoo, owner of the most popular U.S. internet portal, said in February that Facebook had to license its technology and noted that other web companies had licensed its intellectual property. Yahoo is looking for ways to revive growth after losing ground to Facebook in the display-ad market and trailing Google in search.
“For much of the technology upon which Facebook is based, Yahoo got there first,” Yahoo said in the complaint. “Facebook’s entire social-network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo’s patented social-networking technology.”
Yahoo lost its No. 1 spot in U.S. display advertising (which includes video and graphically based marketing messages) to Menlo Park, Calif.-based Facebook last year, according to eMarketer. In January, Sunnyvale, Calif.-based Yahoo reported fourth-quarter revenue of $1.17 billion, excluding sales passed on to partner sites, falling short of analysts’ estimates of $1.19 billion.
“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,” Facebook said in a statement. “Once again, we learned of Yahoo’s decision simultaneously with the media… We will defend ourselves vigorously against these puzzling actions.”
In an e-mailed statement, Yahoo said that its patented technologies attract more than 700 million unique visitors every month.
“Unfortunately, the matter with Facebook remains unresolved, and we are compelled to seek redress in federal court,” Yahoo said in the statement. “We are confident that we will prevail.”
How does this lawsuit reflect on Yahoo and Facebook’s consumer brands? What are the potential business implications for both companies? Post your thoughts in our comment section.
