Yahoo! & Facebook spat part 2–not so unusual but $3bn?

by Andrew Watson on 29 February 2012

Amongst the comments about the licensing approach by Yahoo! to Facebook, this one catches the eye on the Forbes.com blog suggesting that Yahoo! should insist on a license fee of $3bn from Facebook, worked out by the simple maths of take Nortel’s inflated patent portfolio value by reason of the strategic interest shown by groups of bidders and MMI’s massively inflated value (when there was one very strategic bidder) and apply those to the Yahoo! portfolio.

It seems every patent story comes with an associated financial story that can only talk in billions of  dollars.

Come on–this isn’t really that unusual as behaviour. Yahoo! is in financial trouble and has a relatively large and mature patent portfolio but no real history or reputation of being aggressive. Facebook is on a financial high and has an immature patent portolio (therefore, likely, little to fight back with). Yahoo!s CEO and executive management will be looking for every opportunity to boost cash and value (naturally) and it should be expected that every part of the organisation will be asked to contribute. 

“We do have these patents” says the IP group…”they’ve not been previously litigated, but if you look at companies like Acacia and IV, they make money by waving them at companies at  a moment of vulnerability like an IPO…it’s not what we have done before but if you’re looking for hidden value we could try….it wouldn’t cost that much to try….”

 If not monetised when needed, what value does the patent portfolio have to Yahoo!? The answer is little, it is a cost centre not a profit centre. So Yahoo! quickly appears to move up the IP value ladder by apeing a troll. At what price to its corporate reputation is not really questioned.  

And how to monetise quickly? Answer. Join the long list of people trying to financially benefit from Facebook’s IPO by publicly approaching Facebook and threatening litigation if Facebook doesn’t settle. It may just work but may well depend on how long a queue Yahoo! has joined and just how keen Facebook is to take this particular approach out of its prospectus.

I read yesterday that Apple has been the defendant in 242 patent litigation cases. High profile IPO’s will bring these out. There is little that should therefore be seen as unusual in Yahoo!’s approach. The timing is optimum on both sides. 

At anything like the Forbes numbers though (or even a fraction of those) then Facebook has no choice but to fight. If it settles it will be for a small number. Otherwise, it will be interesting to see the Facebook prospectus relegating the Yahoo! approach to one of a large number of litigation threats in progress.

 As a ps to this story, the queue was apparently 22 infringement lawsuits filed against Facebook in 2011. The public data only shows those that were litigated. Many more will have been settled. As we said, Yahoo! may have to take their place in a long line of people. Is there any reason to take this threat any more or less seriously than those chronologically ahead of Yahoo?

As a pps, 2+2 may not equal 5, but we’d be making a small bet that Facebook is now an RPX member, although undisclosed.

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Online Global Week in Review 2 March 2012 from IP Think Tank
03.05.12 at 1:56 pm

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