Status update: Facebook defriends Yahoo, countersues for patent infringement

Remember last month’s post about Yahoo suing Facebook for infringement of 10 of its patents?  It hasn’t taken Facebook long to strike back.  Last week, the social networking giant brought a counterclaim in the US District Court in San Francisco in which it denies Yahoo’s claims and accuses Yahoo of violating 10 of its patents, including patents for displaying advertising, privacy and photo sharing.

Facebook is seeking a jury trial, unspecified damages and for Yahoo’s lawsuit to be dismissed.

Ted Ullyot, Facebook’s general counsel, stated that Facebook was asserting claims of its own “in response to Yahoo’s short-sighted decision to attack one of its partners and prioritise litigation over innovation”.

In response, Yahoo has said that Facebook’s complaint is “without merit and nothing more than a cynical attempt to distract from the weakness of its defence”.

Interestingly, The New York Times reports that Facebook employees invented only two of the technologies covered by the patents that Yahoo is alleged to have infringed.  The rest appear to have been purchased, since they were granted before Facebook was founded in 2004.

The wider information technology community has weighed in on the saga, casting Yahoo as the out of touch villain and Facebook as the white knight of innovation.  For example, David Sacks, CEO and founder of Yammer, has offered Yahoo employees a $25,000 signing bonus if they quit their jobs in the next 60 days.  Apparently, he has received 70 resumes already. 

Both Facebook and Yahoo have a lot on their plates at the moment. This week, in its largest financial acquisition to date, Facebook purchased the photo-sharing application Instagram for $1 billion.  Meanwhile, Yahoo has announced that it will lay off 2,000 employees (14% of its workforce), in order to make the company “smaller, nimbler” and “more profitable”.

With Facebook’s IPO fast approaching it will be interesting to see how this battle plays out.