IT HAS COME TO THIS: Talks Aborted, Yahoo Prepares To Sue Facebook Over Patents

scott thompsonNew Yahoo CEO Scott Thompson

Photo: PayPal

Besides massive layoffs, it looks like new Yahoo CEO Scott Thompson’s first big move is going to be a lawsuit.

Yahoo will seek “formal action” against Facebook over alleged patent infringements, a source briefed on aborted talks between the companies tells us.

The most likely “formal action” Yahoo will take is a lawsuit, this source says.

Yahoo is going to claim that Facebook is using Yahoo inventions in online advertising and social networking without paying for the privilege.

This source says Yahoo executives first made Facebook executives aware of these alleged patent infringements only a week or so ago.

Sporadic talks since then have gone nowhere, and now Yahoo is planning a suit.

A second source briefed on Yahoo’s efforts says the company will seek a percentage of Facebook’s revenues going forward.

Facebook declined to comment on this story. Yahoo declined to comment on this story. Yahoo offered the same statement it gave a couple weeks ago when talks with Facebook began.

“Yahoo! has a responsibility to its shareholders, employees and other stakeholders to protect its intellectual property.  We have invested substantial resources into these innovations.  recognising that, other major web and technology companies have already licensed some of these technologies.  We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights.”

It’s sad that it has come to this for Yahoo. In any world not held hostage to stupid patent laws, Yahoo obviously has zero claim to the invention of social networking.

We’d wonder if this suit will dampen Yahoo employee morale and hurt the company’s efforts in recruiting and retention, but – as one source pointed out – Yahoo is about to do plenty of “un-recruiting” that will do worse.

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