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Why Silicon Valley Doesn't 'Like' Yahoo's Facebook Lawsuit

By Stephanie Rabiner, Esq. on March 19, 2012 | Last updated on March 21, 2019

Yahoo has sued Facebook over 10 of its patents, some of which cover methods for webpage customization, content sharing, ad placement, sending messages to friends, and social photo optimization. The lawsuit comes a month after the search company threatened legal action against Facebook if it did not license the technology.

These sorts of suits are par for the course in an industry known for its ongoing patent wars. But Silicon Valley seems to think Yahoo's suit is a different sort of beast.

Facebook has called the Yahoo lawsuit "puzzling," and has expressed "disappointment 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." The tech world seems to agree.

Some see the patent suit as a desperate attempt by Yahoo to "squeeze a ton of cash out of a company it once tried to buy," reports CNET. Some also suggest that it will be difficult for Yahoo to hire good people after this move, pointing out that the company has "crossed the unspoken line ... that web companies don't sue each other over their bogus patent portfolios."

This sort of reaction does not appear to bode well for Yahoo, a company that has seen its revenue steadily fall over the past three years. But strangely enough, at least one intellectual property specialist told CNET that it could work out in the company's favor.

The patents at issue in the Yahoo-Facebook lawsuit are central to the social network's operation. Facebook, faced with investor uncertainty on the eve of its IPO, will likely do anything to make the dispute disappear. This may include outright buying Yahoo's patent portfolio, injecting the company with much needed funds.

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