But although Facebook has seen patent suits against it double in the last year, don’t necessarily take this as a sign that Yahoo will necessarily extend its fight to more jurisdictions, nor that social media will be come the next battleground, after mobile, in patent wars, says one senior patent lawyer in London.
Myles Jelf, a partner at the UK law firm Bristows — which works with a number of multinationals in the telecoms, media and technology sector on patent and intellectual property cases, including Samsung in its patent dispute with Apple — says that he would be “surprised” if Yahoo began to broaden out its case beyond the U.S.
“The cost goes up by an order of magnitude once you spread across the globe,” he said, but he added that other jurisdictions might not be so sympathetic on “method” patents describing different functions, and what they are supposed to protect. “Outside the U.S., it’s much harder to make claims like that stick,” he said. “It’s generally a lot easier to get one granted than it is to uphold it in court, so I think Yahoo should think quite hard before exposing itself in a number of other jurisdictions.”
He also notes that if it is the case that Yahoo is banking on Facebook being inclined to make a deal pre-IPO, “a big piece of litigaion is all you have to put in play.”
Nor does he think that patents around social media will ever have the same currency as those around mobile technology — a field that has spawned a number of suits between Apple and Android device makers (like Samsung), as well as other companies including Microsoft, Nokia and many others.
“In the Apple/Samsung cases, for example, it’s a global battle for consumers, and it’s a matter of life and death,” he said. “It’s like the two competing against each other on the supermarket shelf, and that’s why you have to go into every court.”
In contrast, he explained, “Yahoo is not saying Facebook is a competing service, and it should be pulled. It’s saying: you are using my technology and so we want a revenue stream.”
Beyond that, in the mobile world, he noted that the players who have huge patent portfolios have them because they’ve invested often billions in research money to make something work. “All of this — 3G and 4G technology — costs billions of dollars to create and so there’s a greater driver to produce income from that. In social media it’s not R&D billions but neat packaging.”
However, he does note that the market for internet services significantly more saturated now than it has been in years past — in the case of Yahoo that has meant difficulty in getting an edge over Google in search, or competing against them as effectively in advertising. That means companies that work in these fields “will need to find new income streams, and so if there are any possibilities in that patent portfolio” to do that, this could change the outlook significantly.
And — as if almost on cue — Tim Armstrong, CEO of AOL, TechCrunch’s owner, came out with a line on its own portfolio of 700-800 patents:
“You should assume we understand that portfolio, and assume we have a strategy on it,” he said at a Barclays investor conference (via AllThingsD). Activist investor Starboard Value has said in the past that those patents could earn AOL in excess of $1 billion annually if “appropriately harvested and monetized.”