IT’S ON: Facebook launches countersuit against Yahoo – claims 10 patents its violating

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Facebook has responded with Yahoo’s claims of patent infringement with its own counter-claim that Yahoo has violated 10 of its own patents – including its patents on social networking, privacy controls and in advertising.

Facebook is also denying that it has infringed on Yahoo’s patents. However, on Yahoo’s alleged infringement, the social network is claiming that most of its profits were based on its infringement of its patents and it feels “irreparably harmed”.

Noting in its filing:

Yahoo! infringes the Facebook patents-in-suit through, by way of example and not limitation, the Yahoo! Home Page, […] the Yahoo! Flickr photo sharing service, and advertisements displayed throughout Yahoo! including My Yahoo!, Yahoo! Finance, Yahoo! Sports, Yahoo! News […] According to Yahoo! advertisements contributed 80% of Yahoo!’s revenue in 2011 accounting for more than $4 billion.

Noted by the New York Times’ DealBook blog, the patents appears to be mostly acquired since only two patents were actually developed by Facebook employees. The other eight were granted before Facebook’s founding in 2004. It’s not sure if some of IBM’s patents it recently acquired are being used.

Of course, Yahoo is not saying much – though, it did say that its case appeared on face value to be “without merit” and was a simple “cynical attempt to distract from the weakness of its defense”.

The Facebook-Yahoo spat will certainly have some legal repercussions as if Yahoo succeeds, then it could potentially claim other violations with other networks such as Twitter and Google. In addition, it also marks a significant shift in policy in Yahoo – noted before, the company only used its patents for defensive purposes from other companies. It has over 1000 patents in its name, compared to Facebook’s under 100 patents (before buying IBM’s patents).

Speculation is also mounting that it’s also trying to get Facebook to give some of its stock to Yahoo as ‘compensation’ and will most likely cash that in when the IPO is launched. Yahoo does have history with this tactic – since it successfully managed to get some Google stock in its lawsuit against them over patents (should note that it was launched by Overture, which Yahoo acquired and soon negotiated a settlement).

But for now, everyone is eagerly awaiting what the courts will do in this case – since it could potentially mean Yahoo could be suing every other company with similar functions.

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