Facebook got a patent on its “newsfeed” service, which triggered a panic about what this would mean for Google, Twitter, MySpace, and other social networks.
Here’s what it means: At worst, these companies will have to pay Facebook some money.
Nick O’Neill at All Facebook has the most info on the patent that we’ve seen. Nick’s information suggests that Facebook’s patent will not directly affect what Google and Twitter are doing now (we’re not current on what MySpace is doing). And if and when the patent does affect what these companies are doing, assuming the patent stands up to legal challenge, the remedy will likely be royalty payments.
One key point is that the patent apparently does not cover status updates. What it covers, according to Nick, is actions–this friend has become friends with this other friend, this friend joined this group, etc. As yet, Twitter, at least, isn’t broadcasting “action updates.” It’s broadcasting status updates.
At worst, if the patent stands up, and Google and Twitter are deemed to be directly violating it, Facebook will get a new source of capital, which will likely be dealt with with a one-time cash or stock payment.
Google, you may recall, was eventually found to be violating Overture’s patent on bidding for keyword search terms. Unlike Facebook’s newsfeed, this was Google’s primary business and revenue stream. And the situation was eventually resolved not with a dissolution of Google but with a meaningful (but not debilitating) payment to Yahoo, which had acquired Overture.
Even if the patent stands up, therefore, and even if Google, Twitter, and another other company is eventually deemed to be violating it, the remedy will almost certainly be money.
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