Here's Why Yahoo Suing Facebook Is Nothing Like When Yahoo Sued Google

mark zuckerberg, facebook, getty

Photo: Justin Sullivan / Getty Images

Yahoo’s decision to sue Facebook just before it IPOs isn’t unprecedented.As Kara Swisher of All Things D points out, Yahoo sued Google over patents when it was about to IPO.

What she doesn’t point out, though, is that this case is totally different.

Google quickly settled with Yahoo, giving it 2.7 million shares, which Yahoo quickly flipped*. 

The reason Google settled with Yahoo is because Yahoo had a legitimate case on its hands. Yahoo bought search engine Overture, which was the first to come up with auction system for paid click ads in search. In his book on Google, “In The Plex,” Steven Levy writes, Google “adopted” Overture’s idea of pay per click, as well as Overture’s auction system.

Google innovated on Overture’s original idea, but still, it had clearly taken its inspiration directly from Overture.

Overture decided to sue Google in 2002 over the idea. Two years later Google settled.

In this case, Yahoo gave Facebook almost no heads up on the lawsuit. And Yahoo appears to have a paper thin case against Facebook. As VC Fred Wilson wrote today, these patents are “a crock.

One example: Yahoo says in its lawsuit, “Yahoo! recognised that website users are attracted to free services. But website operators need a way to generate revenue even when offering services for free. Yahoo!’s Advertising Patents claim effective methods of advertising, or generating advertisements that relate to users individually and monitoring advertising clicks for potential click fraud.”

It’s basically claiming that it has a right to sue any ad supported website. That’s insane.

And that’s the big difference here. This Yahoo lawsuit is ridiculous. The suit against Google was not.

Don’t Miss: These Are The Patents Yahoo Is Suing Facebook Over

*Somehow Yahoo had 8.2 million shares of Google at one point. It sold all those shares, gaining $1.4 billion. Sounds good right? Rolfe Winkler at the WSJ points out Yahoo is a crappy stock timer. It could have made $5 billion.

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