Yahoo claims Facebook bought patents to countersue it

IDG News Service - Facebook purchased in the last five months eight of ten patents it has cited in a counterclaim to a patent infringement lawsuit filed by Yahoo, and several were purchased after Yahoo filed the suit, the Internet portal claimed in a filing on Friday before a federal court.

Yahoo has also alleged that Facebook has infringed two more of its patents in addition to the ten patents it sued for last month.

Facebook denied earlier this month Yahoo's claims that it had infringed the 10 patents, and filed a counterclaim that Yahoo had infringed 10 Facebook patents.

"On information and belief, many, if not all, of these patents were acquired by Facebook for purposes of retaliation against Yahoo! in this case," Yahoo said in the filing on Friday.

Contrary to an agreement that is said to exist between the in-house counsels for the two companies to raise intellectual property issues with each other in the first instance, Facebook did not provide a notice to Yahoo of any alleged infringement, and did not attempt to resolve the alleged infringement of any of its patents by Yahoo before asserting them in litigation, Yahoo said.

The eight patents were acquired by Facebook from patent firms IPG Electronics 503 and Right Point, patent holding company Cheah Intellectual Property Licensing, and the New York University's intellectual property licensing department, Yahoo said in the filing before the U.S. District Court for the Northern District of California, San Francisco division.

Facebook acquired 750 patents from IBM in March, and more recently agreed to buy a portion of the patents Microsoft is to acquire from AOL in an over US$1 billion deal.

The move by Facebook reflects growing interest from technology companies to acquire patent portfolios both to counter and initiate patent litigation. Ailing companies are also looking at patent sales as a way to raise cash. Bankrupt Nortel Networks raised $4.5 billion through the sale of patents and patent applications to a consortium consisting of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony. Eastman Kodak has also said that it is considering the sale of its digital imaging patent portfolios as one of its strategic alternatives to come out of bankruptcy protection.

In its reply and counterclaim on Friday to Facebook's reply, Yahoo has denied infringing the ten patents, and claimed Facebook purchased and asserted patents tainted by inequitable conduct, including allegedly the intentional failure to name a known inventor, and adding new information to a patent.

Facebook is also said to have asserted its newly acquired patents against aspects of Yahoo's products for which there is little to no publicly available information. "Unless Facebook has unlawfully acquired Yahoo! confidential business information, Facebook could not have developed a good-faith basis for many of the infringement allegations in its counterclaims," Yahoo said.