Facebook Bolsters Legal Defences By Purchasing 750 IBM Patents

Facebook has boosted its legal war chest by acquiring 750 patents from IBM, according to Bloomberg who cited a person with knowledge of the transaction.

The social network’s portfolio previously stood at 53 issued patents and 503 filed applications with the US Patent and Trademark Office.

Patent war chest

The patents purchased from IBM are reported to cover various software and networking technologies, some of which Facebook will hope to use against Yahoo and Mitel, two companies currently seeking to capitalise on the social network’s pre-IPO period.

Mitel, a provider of business communications and collaboration software, filed suit just over a week ago over two patents for “automatic web page creation” and “pro-active features for telephony”. It is seeking royalties and legal fees for the infringements.

Yahoo, meanwhile, is aggressively targeting one of its major sources of new users by going after Facebook. The former search giant is demanding triple damages for infringement of ten patents relating to privacy, messaging and advertising. The lawsuit came only a few weeks after Yahoo demanded licensing fees from Facebook for the patents.

“Facebook’s entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo’s patented social networking technology,” Yahoo said at the time. “Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court.”

Facebook’s deal with IBM, while not guaranteed to stop Yahoo or Mitel’s suits, offers the potential for countersuits and future defences against other opportunistic parties. As the social network prepares for its initial public offering, these defences will solidify the company’s reputation in the eyes of potential investors and will ensure some semblance of legal stability.

“We are currently, and expect to be in the future, party to patent lawsuits and other intellectual property rights claims that are expensive and time consuming, and, if resolved adversely, could have a significant impact on our business, financial condition, or results of operations,” Facebook said in its SEC filing.

As Facebook said it would consider launching product in markets which it does not currently compete, thereby opening up further possible infringement suits, the portfolio will be a highly valuable addition to the company for now and the future.

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