Yahoo! Crosses The Line
The patents that Yahoo! is suing Facebook over are a crock of s**t. None of them represent unique and new ideas at the time of the filing. I supect they all can be thrown out over prior art if Facebook takes the time and effort to do that.
Context & Ripple Effects
Yahoo's suit is the escalation of a fight it telegraphed two weeks earlier, when it warned Facebook of a potential patent fight, and it lands at the worst possible moment for Facebook: the company had already flagged the dispute as a new risk factor in its amended S-1 filed March 8, days before its IPO pricing window opens. The story also has history — Forbes argued back in November 2011 that whoever controlled Yahoo's patent portfolio could cripple Facebook's IPO aspirations.
The pickup was unusually broad for a blog reaction: AllThingsD, paidContent, Business Insider, ReadWriteWeb, TechCrunch and others all covered the filing the same day, with paidContent cataloguing all ten asserted patents and Business Insider arguing Microsoft — a Yahoo search partner and early Facebook investor — should intervene on Facebook's side.
First-order effects
- Facebook must now fund a prior-art defense across ten asserted patents while in its IPO quiet period, with the dispute already written into its amended S-1 as a disclosed risk.
- Yahoo converts an underused patent portfolio into immediate leverage over a pre-IPO rival, using Zuckerberg's own words from Facebook filings to support infringement claims.
Second-order effects
- Facebook's most likely counter is invalidity: if prior art holds up, the cost of defending shifts to proving the patents never should have issued, raising the price of every future assertion from this portfolio.
- Microsoft's dual position — Yahoo search partner and Facebook shareholder — becomes awkward, and Business Insider's call for Microsoft to back Facebook shows pressure building on that relationship.
Third-order effects
- If suits like this keep landing in IPO windows, pre-IPO companies will treat legacy-patent litigation as a standard toll charge, accelerating demand for defensive patent pools and invalidity-first litigation strategies.
- The pattern points toward declining web incumbents monetizing patents as a core revenue line rather than a shield — a shift that invites regulatory and court scrutiny of low-novelty software patents.
The trend: Distressed web incumbents are increasingly monetizing legacy software patents against rising rivals at their most vulnerable financing moments, testing how far courts and markets will tolerate low-novelty assertions.