Yahoo sued Facebook for using some of its patented web advertising methods and systems. This happens as Facebook is about to have its IPO. Seems to be a good timing for this kind of legal battle.

According to a U.S. government database, Yahoo has over 3300 patents and published patent applications, while Facebook has only 160.  This seems to be a great opportunity for Yahoo to get their hands on some of the cash Facebook is about to collect from future shareholders. Yahoo went through a similar case with Google right after they went public in 2004. Google ended up paying Yahoo about $1.5 B to settle down. However, Google in past years has generated over $150 B from it. Let’s say like a 1% TAX, not a bad deal.

Somehow, it feels like these days this is how it is going to be. One company gets a patent for a product/service, this proves the model works. An other company comes in and uses the same method until they get busted. But by the time they get busted they have already generated so much cash that even if they settle down both companies end up winning. Is this really a great plan? Well, let’s see what happens with Yahoo and Facebook. Legally we expect Yahoo to be the winner but we will check on its progress to see if Yahoo can bring Facebook down to a $50 B settlement.