Aldrich Law Firm, Ltd.
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Facebook purchases 750 patents from IBM after Yahoo lawsuit

As it prepares for a lawsuit from a fellow Internet giant, social media company Facebook has bought 750 patents from IBM for a range of tech-related products. The purchase is part of a strategy to increase the company’s intellectual property and build up its bargaining power in the suit, which was filed by search engine company Yahoo. The price of the patents is not known.

Yahoo filed the litigation against Facebook earlier in March. The lawsuit claims that Facebook violated 10 of Yahoo’s patents. Some of the patents in question have to do with technology for advertising online.

According to media reports, in lawsuits of this nature, companies often will countersue — or threaten to countersue — for patent infringement over patents the defendant company owns. However, though Facebook is one of the largest and most recognizable Internet companies, it may surprise readers in the Las Vegas area to learn that the company did not have that many patents prior to the IBM purchase. As of the end of 2011, Facebook had 56 patents issued to it, with 503 applications pending. In comparison, Yahoo had more than 3,300 accepted and pending patents.

The real purpose of the purchase may be to level the playing field to increase the chances of a settlement. Facebook is preparing to issue an initial public offering on the stock market, which could increase the value of the company to $100 billion, and executives likely want to minimize all legal problems before that occurs.

Source: Reuters, “Facebook buys 750 patents from IBM: source,” Dan Levine and Alexei Oreskovic, March 22, 2012

John P. Aldrich
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