All of the opinions below are mine and only mine.
On top of everything else happening in the social space (Google Buzz, everyone leaving MySpace, Facebook changes), this happens: Facebook Patents The Newsfeed. You can read the full copy of the patent here.
Now before we all have a “What the hell moment,” here are a few things to remember:
Some patents are virtually unenforceable.
Various companies have patented the shopping cart, the GIF image, the one-click purchase and the affiliate program. The one-click purchase made Jeff Bezos look like a fool for a while, especially after they went after Barnes and Noble.
If you haven’t noticed, none of the above are really enforced except for the GIF image patent, which there’s “sometimes” a $5,000 licensing fee. Unisys at one point threatened to go after every website that had a GIF image somewhere on the site.
That was popular.
A few patents, like the one-click purchase and the affiliate program, have given rise to protests and eventual defeat of a lot of the claims Amazon had over the business process. Most of those patents are violated every second of the day because they are ubiquitous and so mainstream there’s no way to enforce them.
Some patents are more for defense against large competitors.
While it doesn’t make sense for Facebook to sue everyone, I’m sure they’re thinking about what they can bring up against Google, MySpace and a few other large properties with a newsfeed.
Other places are probably thinking about how to re-architect their solutions now to avoid any patent infringement. That said, if you’re running a site that isn’t one of the top 1,000, I don’t think Facebook is going to be sending a lawyer your way anytime soon.
Some patents are for getting money out of people and for increasing market value.
One of the few points people forget about Google is that the concept of AdWords wasn’t invented by them. It was patented by GoTo.com. I’ll admit that Google does it much better than GoTo/Overture ever did, but it was enough of a threat that Google eventually settled with Yahoo!, who had purchased Overture.
The lawsuit against Google related to its AdWords service. In February 2002, Google introduced a service called AdWords Select that allowed marketers to bid for higher placement in marked sections – a tactic that had some similarities to Overture’s search-listing auctions.
Following Yahoo!’s acquisition of Overture, the lawsuit was settled with Google agreeing to issue 2.7 million shares of common stock to Yahoo! in exchange for a perpetual license.
That patent was probably one of the reasons why Yahoo purchased Overture. There are holding companies whose purpose is to hold patents. However, they are selective about who they sue because lawyers are expensive. It’s an ROI equation, and there’s no point going after someone without money, right?
Friendster, which was recently bought by a Malaysian company, made much of the fact that had obtained five U.S. social networking patents, at times using the patents to scare off the competition, at least in the press.
Some patents are declared invalid.
The U.S. Patent Office grants a lot of patents. It doesn’t necessarily mean they will stand up in court. Gibson Guitars has been on a rampage, suing anyone that produces music simulation software like Guitar Hero. Read more here.
They have yet to win.
What would happen if Facebook went after MySpace in court, and the patent was declared invalid?
What if a single social network invented before Facebook had the same implementation, and Facebook was in violation of the intellectual property of that website? Would that company win $500 million like when Microsoft was sued over the browser plug-in?
The patent is particularly valuable because news-feed style communication has become pervasive since it was launched on Facebook. However, it's not clear that there aren't precedents for the technology; for instance, the social network Multiply.com had a similar interface for keeping track of friends' actions before Facebook launched its own.
Mutliply.com suing Facebook? That would be fun.
As big as a deal as this may seem, it isn’t until they do something with it. For now, it’s just another asset they have in the universe of Social Media.