Yahoo's desperate patent fight with Facebook
The only real winners will be the lawyers.
When the going gets tough, the not-so-tough file patent lawsuits. Yahoo (YHOO) is a case in point.
The Internet media company on Monday sued Facebook, alleging that the pioneering social media company had infringed on 10 patents that center around advertising and fraud protection as well as customizing a user's experience. Facebook denies any wrongdoing. Now it's in the hands of lawyers, and that's a problem.
Patent litigation is every company's worst nightmare because it's expensive to fight and extraordinarily time-consuming. Most cases are settled out of court for big money. As Reuters notes, companies that are about to go public, such as Facebook, are vulnerable to these kinds of cases because they can scare away potential buyers. Adjusting for inflation, the overall median award is $5.1 million over the past 16 years, according to a study by PricewaterhouseCoopers.
Last year, President Barack Obama signed into law the first overhaul of the patent process since 1952. The law was designed in part to discourage patent lawsuits, which some critics argue stifle innovation at a time when the U.S. economy desperately needs it. Unfortunately, the nation's patent system faces many other problems. According to media reports, there is a three-year waiting period for final patent approval because of chronic underfunding.
Companies are as zealous as ever in protecting their intellectual property. Yahoo, for instance, reportedly holds 3,000 patents. Odds are that somebody somewhere is infringing on some of them. The company no doubt has a gaggle of lawyers looking into this as we speak.
Jonathan Berr has no position in the stocks listed here.
What people should be looking at is Leader.v.Facebook which just got out of Federal apppeals court 03/05/2012. Facebook lost on 11 of 11counts of infringment. Check out all the info on donnaklinenow..... Facebook is going down!
Also check out the interview on CBS-TV-KPIX with Julie Watts about Facebooks infringment loss its a great interview.
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