A Rite of Passage for Social Networking

March 20, 2012

Yahoo v FacebookThey are like rites of passage for the different technology sectors. 

Major patent infringement lawsuits provide an indication that a particular set of technologies is maturing and becoming worthy of substantial commercial attention.

Only when enough money and economic impact become associated with a cluster of technologies do the parties involved bring out the big competitive weapons represented by patent litigation.

Companies do not waste their resources litigating over patents that possess little commercial potential.

By this measure, the recently filed patent infringement case brought by Yahoo against Facebook provides a clear indication that social networking has reached prime time.

Traditionally, Yahoo and Facebook have collaborated effectively, working well together in a variety of contexts.

That relationship may change now, as Yahoo recently went to court claiming that Facebook has infringed ten Yahoo patents.

The patents cover a range of technologies and methods applied to key online functions integrated into social networking systems, including, privacy, customization, advertising, and messaging.

The patents at issue address technologies and methods that make social networks possible and commercially attractive.

The lawsuit was launched at an inconvenient time for Facebook.

As the company is moving toward its anticipated initial public offering of stock, this patent infringement action forces Facebook management to address the issue at a time when the company’s actions are highly visible to the public and are under substantial scrutiny.

Additionally, while Yahoo’s claims appear to pose little long-term threat to Facebook, increasingly active patent enforcement in the social networking environment could pose a more significant threat to smaller companies involved in the world of social media.

As patent litigation in social networking increases, big players such as Yahoo and Facebook have the resources to assert and defend their interests, but smaller players may not.

Yahoo’s patent claims may be little more than a nuisance and inconvenience for Facebook, yet they are significant symbolically for social networking, as a whole.

These first major patent infringement claims directed toward social networking technologies demonstrate that important business interests appreciate the substantial commercial value of social media and are willing to use the powerful tool of patent litigation to protect and expand their competitive positions.

This litigation signals a noteworthy change in the social networking community, marking a shift from the informal, collaborative tone of its early years to the formal, competitive setting associated with commercially mature technology sectors.

This first big patent fight in social networking will not be the last, and it marks a commercial coming of age for social networks, with all of the advantages and disadvantages associated with that maturity.