Yahoo had filed its lawsuit at a critical moment when Facebook was poised to launch an IPO for raising the value of the company up to $100 billion. Yahoo poured cold water over those dreams and froze them until Facebook parts with the cash sufficient to thaw relations.
While Facebook was especially vulnerable due to its stance of launching an IPO, Yahoo is facing its own problems and the counterclaim by Facebook adds to its lengthening list of worries. The pioneer of web technology had seen better days, but Yahoo is suffering from continuously declining revenue and the new CEO Scott Thompson is beset with a proxy fight with activist hedge fund Third Point.
However, Yahoo spokesman Eric Berman told the media that Facebook’s counterclaim was “nothing more than a cynical attempt to distract from the weakness of its defense.”
Facebook has alleged that five of its patents have been infringed by the online advertising business practices of Yahoo, and that eighty percent of Yahoo’s 2011 revenue has flowed from its online advertising.
Facebook has also alleged that the photo sharing service Flickr has infringed many Facebook patents that involve the ability to connect and interact with other users who are online, the ability to identify people in a photo, and the ability to generate personalized news feeds.
One of the patents asserted by Facebook lists Mark Zuckerberg among the inventors according to a U.S. government database, and includes a method for digital media tagging.
The General Counsel of Facebook, Ted Ullyot said, “While we are asserting patent claims of our own, we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation.”
The original lawsuit is Yahoo Inc. v. Facebook Inc., U.S. District Court for the Northern District of California, No. 12-cv-1212.