Yahoo Says Patents Facebook Bought Were Just To Countersue, Lack Good Faith, Should Be Thrown Out

Counter-countersuit! Yahoo today claimed that the patents Facebook is countering its original patent infringement lawsuit against the social network with “were acquired by Facebook for purposes of retaliation”, and therefore violate the U.S. Patent Office’s “Duty of Disclosure, Candor, and Good Faith” and should be diregarded by the court. Yahoo also claims Facebook couldn’t legally know enough about its business to know if it was violating Facebook’s patents, that several of Facebook’s new patents were illegally filed, and Yahoo also filed two more advertising patent infringement claims against Facebook.

Facebook responds that “We remain perplexed by Yahoo’s erratic actions. We disagree with these latest claims and we will continue to defend ourselves vigorously.”

If a court agrees that Facebook can’t countersue with patents bought specifically for the countersuit, Facebook could be left wide-open in settlement negotiations, and might have to pay Yahoo a hefty sum of cash and/or stock.

A statement from Yahoo details its position, while also using the word “innovation” to try to seem less troll-like:

“Today’s filing underscores the breadth of Facebook’s violation of Yahoo!’s intellectual property. As we have stated previously, Yahoo!’s technologies are the foundation of our business that engages over 700 million monthly unique visitors and represent the spirit of innovation upon which Yahoo! is built. We intend to vigorously protect these technologies for our customers and shareholders.”

Oddly, when Facebook bought AOL patents from Microsoft last week, Yahoo said “Companies who purchase patents are often working from a position of weakness and take these actions to strengthen their portfolio.” However, the two new patent infringement lawsuits it filed today and three of the original ten are based on patents Yahoo itself had purchased in the acquisition of Overture.

Here are Yahoo’s counter-counterclaims and what they mean for the case:

Facebook’s Patent Countersuit Not In Good Faith

Yahoo says of the ten patents Facebook countersued with:

“Eight of these patents were purchased by Facebook in the past five months, and several of these patents were purchased (independent of any separate technology acquisition or merger) after Yahoo! filed its complaint in this action. On information and belief, many, if not all, of these patents were acquired by Facebook for purposes of retaliation against Yahoo! in this case. No employee or officer of Facebook or any affiliated company conceived of, reduced to practice, or developed the alleged inventions claimed in the eight patents acquired from non-practicing entities. In fact, the applications for many of these patents predate Facebook itself.

Since these were bought from non-practicing entities (aka trolls) rather than being originally filed to cover Facebook’s own technologies, they could be ruled to lack “good faith” and be thrown out, leaving Facebook nothing to offset Yahoo’s infringement claims with.

Facebook Failed To Inform Yahoo Of IP Issues Before Countersuing

Yahoo claims:

Contrary to an agreement between in-house counsel for Facebook and in-house counsel for Yahoo! to raise intellectual property issues with each other in the first instance, Facebook provided no notice to Yahoo! of any alleged infringement, and Facebook never attempted to resolve any alleged infringement of any of its patents by Yahoo! prior to asserting them in litigation. Indeed, the PTO did not even issue U.S. Patent No. 8,150,913 until April 3, 2012—the day Facebook asserted it.

This break in the agreement, and that fact that Facebook countersued with patents issued and that it had bought that day could lend weight to Yahoo’s previous claim that Facebook’s countersuit lacks “good faith”. 

Facebook Couldn’t Know Yahoo’s Technology Violates Its Patents

Yahoo claims:

Facebook 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.

Indeed, when I reviewed all of the patents Facebook was countersuing with, it was difficult to determine their validity of ones like Patent 6236978 because they claimed infringement by back end tech of Yahoo’s. Facebook therefore may essentially be guessing, meaning it “failed to perform a good faith investigation into its counterclaims prior to asserting them” to the court. This could cause several of Facebook’s patents, specifically No. 6,236,978, No. 7,603,331, No. 8,103,611, No. 6,411,949, U.S. Patent No. 6,216,133, and No. 6,288,717, to be thrown out.

Patents Facebook Is Countersuing With Were Illegally Filed

Yahoo says that Facebook patents No. 8,005,896 and No. 8,150,913 were improperly registered by Chris Cheah and C. Douglass Thomas. The inventors of the patents were improperly listed, and and additional filing was made to retroactively apply patent ’913 to social networking. Yahoo says therefore “Every claim of the ‘913 patent is unenforceable due to inequitable conduct and every claim of the ‘896 patent is unenforceable under the doctrine of infectious unenforceability.”

If the court concurs, these patents of Facebook’s could be thrown out, further weakening its bargaining position in a settlement.

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