Critics attack 'pathetic' Yahoo lawsuit

Is Yahoo attempting a shakedown in hopes of grabbing some of Facebook's IPO cash?

By Kim Peterson Mar 13, 2012 2:09PM
Image: Laws (© Photodisc Green/Getty Images)Yahoo (YHOO) has become technology's newest villain after suing Facebook for violating 10 of its patents in online advertising, messaging and other areas.

Within hours after the lawsuit was filed, tech observers rushed to judgment. The suit stinks. Yahoo is totally out of line.

The harshest criticism came from one of Yahoo's former board members. "Pathetic and heartbreaking last stand for Yahoo," wrote Eric Hippeau on Twitter. "It's all over. I loved you very much." Hippeau was on Yahoo's board for nearly 15 years.

Investors seemed to shrug at the lawsuit. Yahoo shares were essentially flat Tuesday at around $14.50.

Venture capitalist Fred Wilson said some words that, well, I can't reprint here. None of Yahoo's patents were unique and new ideas when they were filed, Wilson says, and Facebook could probably have them all thrown out. Yahoo cannot bully Internet newcomers with bogus patents, he said.

"I used to care about that company for some reason," he said. "No more. They are dead to me. Dead and gone. I hate them now."

Yikes. Part of the reason everyone is so worked up is because Yahoo has done this before. Yahoo sued another hot young Internet upstart -- Google (GOOG) -- in 2002 for violating its patents, reports the AllThingsD site. Yahoo sued Google over search patents, and the companies settled 10 days before Google's IPO.

Google gave Yahoo 2.7 million shares of its stock to settle, which Yahoo flipped for some nice cash.

Yahoo is reportedly on the verge of a major reorganization that could involve thousands of layoffs. The following video has more details.

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So here we are again with another hot tech IPO on the horizon. Is Yahoo attempting a shakedown here? Kara Swisher calls it "either the boldest gamble of its history or the most boneheaded," and reports that new CEO Scott Thompson is driving this aggressive strategy.

VentureBeat explains the 10 patents Yahoo is using to sue Facebook. One involves allowing an instant messaging user to have a messaging conversation with an e-mail user. Another allows a website to have custom-placed ads based on user behavior. Another one is for a dynamic page generator.

Yahoo says in a statement that its technologies are the foundation of its business and "represent the spirit of innovation" upon which the company was built. Facebook says it has been a longtime partner of Yahoo, and calls the lawsuit disappointing and puzzling.

Facebook and its legal team are clearly distracted with the IPO and have a lot of other things going on. The easy out here is for Facebook to settle and hand over a bunch of pre-IPO shares. But will Facebook decide to fight this instead?

In the court of public opinion, at least, Yahoo has already lost this one.
Mar 13, 2012 5:04PM
You can't patent an idea. Now if there was software involved, that's something different.
Mar 13, 2012 4:46PM
US software patient policies are FUBAR!
Mar 13, 2012 4:04PM
Everybody should be following Leader.v.Facebook it just came out of Federal appeals court 03/05/2012 Facebook lost 11 of 11 infringment counts. Check out Donnaklinenow for all the updates. Facebook is going down with this one.
Mar 13, 2012 5:41PM
Facebook's IPO is expected sometime this spring. We don't yet know the specific date. You can forget about getting in on the IPO unless you are an investment bank, an institutional investor or a multi-millionaire. Anyone can buy shares on the first day of trading, however.
Mar 13, 2012 5:33PM
How does one know exactly when Facebook's IPO will come out so to buy shares??

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