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After a few weeks of threats, and what Facebook calls some token negotiation tactics, Yahoo has sued Facebook for patent infringement.Normally in cases like this, the company being sued would look through its own patent portfolio, find some claims that Yahoo probably infringes upon, then send the lawyers over to Sunnyvale to negotiate.
Eventually, some money would change hands, a deal would be struck, and the whole mess would go away.
Except Facebook only has 20 patents, according to a quick search of the USPTO database.
Yahoo has more than 1,000.
Fortunately, Facebook also has a big powerful friend: Microsoft.
Microsoft has more than 20,000 patents. And it’s not afraid to use them.
Microsoft bought a 1.6% stake in Facebook back in 2007. Microsoft’s stake did not appear in Facebook’s S-1 filing because it’s been diluted, but Microsoft assures me that it still owns a part of Facebook. Microsoft is also a strategic partner: Bing uses Facebook’s social data in its search results, and Facebook integrates Skype video calling.
The only complicating factor is that Microsoft and Yahoo also have a patent sharing deal through their 2009 search agreement.
The exact terms of the Microsoft-Yahoo deal are private, but a brief outline was filed with the SEC. That outline says that:
- Both Yahoo and Microsoft have the rights to use each other’s patents as they relate to search.
- Microsoft had the right to cross-licence some of Yahoo’s more general patents for online services and sublicense them to third parties — like Facebook. Apparently, either Microsoft didn’t exercise this right (we asked; Microsoft wouldn’t say), or they did but haven’t assigned those patents to Facebook yet.
- But: neither party is “prevented or restricted from licensing, selling, or otherwise disposing of any of its patent assets.”
Whatever the case, it looks like nothing is preventing Microsoft from selling or donating some non-search-related patents to Facebook, then stepping back and watching the fireworks.
Either way, it’s time for Mark Zuckerberg to pick up the red emergency telephone and dial Redmond.