If Facebook pays up, experts say Yahoo may go full time patent troll

Yahoo has put the IP squeeze on Facebook, slapping it with a patent lawsuit during the quiet period in the run up to the social network’s IPO. While it’s tempting to see this as the first shot fired in a broader patent war centered around social networking, Lance Lieberman, a veteran New York patent lawyer with a specialty in software, thinks it’s just Yahoo’s first step down the dark path towards life as a patent troll.

“If Yahoo gets a quick settlement here, they will continue to dig into their war chest to see what patents they can monetize,” Lieberman, who works with Cozen O’Conner, told VentureBeat in an interview yesterday. “With a new CEO facing pressure from Wall Street and activist investors breathing down his neck, intellectual property is a way to drum up revenue quickly.”

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Numerous critics, from investor Fred Wilson to billionaire Marc Cuban, have lambasted Yahoo for going after Facebook with what they see as obvious, generic patents that would apply to most modern web sites. But that, says Liberman, is exactly the point.

“I’ve looked at the patents, and while they are broad, they aren’t outrageous,” Lieberman said. “The main thing to consider is the effective filing date. While a lot of this stuff might seem obvious now, a decade ago, when Yahoo applied for the patent, it was just a gleam in the eye of Web 1.0.”

As Andy Baio wrote for Wired, Yahoo had a “Patent Incentive Program,” with sizable bonuses issued to developers who took the time to sit down with the companies lawyers and draw up patent submissions. “Yahoo assured us that their patent portfolio was a precautionary measure, to defend against patent trolls and others who might try to attack Yahoo with their own holdings. It was a cold war, stockpiling patents instead of nuclear arms, and every company in the valley had a bunker full of them.”

With a massive exodus of technical and executive talent from Yahoo, its intellectual property may soon be its most valuable commodity. “They could morph into a non-practicing entity, similar to a patent troll,” Lieberman said. “From the time it began, Yahoo never had  a focused business like Facebook. They were search, they were a portal, they were social, they were media. So they have a broad swath of patents to call on.”

Image via Flickr user Benimoto