Facebook – Tough Stance or Bully?

It’s not tit for tat, but it’s a way to say to the plaintiff, look, this isn’t just going to be an easy ride for you. You’re going to now have to fight back against our own patents.

Those are the comments of a Boston-area patent attorney, quoted in this article from WBUR.org.  So is Facebook just being tough, or are they being a bully?

Naturally, the Facebook lawsuit is likely to be about leverage more than anything else.  Facebook is rumored to be worth anywhere between $6.5 – $11 Billion, while revenue estimates (unreliable though they may be) put Phoenix Media Group annual revenues somewhere around $10 M.  I seriously doubt Facebook is planning to get rich, although some are calling Facebook’s actions an act of bullying.  (Fair enough. This is an aggressive move for Facebook, and one that other frequent patent targets will likely pay attention to).

Joe Mullin’s article at paidcontent.org is also noticing Facebook’s tough stand against patent plaintiffs:

Facebook hasn’t settled any of the 15 lawsuits against it. That suggests Facebook is taking a hard line on patent lawsuits, with the hopes of deterring other “patent trolls” that might be thinking about coming after it.

Joe also notes the origin of the two patents, which I also mentioned on Tuesday.  The patent from HP is particularly interesting since HP doesn’t exactly keep their current patent sales efforts a secret. HP also makes the terms and conditions of the sale available on its website.  According to 7.1.1 of their Online Patent Sales Agreement, any patent sold carries a covenant that the purchaser will not sue anyone for infringing the patent unless certain conditions are met:

Covenant not to Sue or Assert. Purchaser and each of its Affiliates hereby covenant and agree, for the life of the Licensed Patents, not to Pursue any Proceeding or make any Assertion against any Person based upon one or more of the Licensed Patents. Notwithstanding the foregoing, Purchaser or any of its Affiliates shall have the right to Pursue a Proceeding or make an Assertion based upon one or more of the Licensed Patents against an Adversary if the Adversary has, after the Closing Date: (a) Pursued a Proceeding against Purchaser or one of its Affiliates that (i) is not a Responsive Action and (ii) is pending at the time Purchaser or its Affiliate Pursues the Proceeding or makes the Assertion; and/or (b) made an Assertion against Purchaser or one of its Affiliates that is not a Responsive Action and is not based upon patents that are involved in any Proceeding between the Adversary and Purchaser pending at the time the Assertion is made.

I have no idea if these terms apply to the patent being asserted by Facebook or not, but this is an interesting way for HP to monetize its portfolio without having to worry about answering to angry customers or business partners wondering why they are dealing with lawsuits over former HP patents.

UPDATE – 11/11/2010 8:30 am

Erik Sherman predicts in his BNet article that this signals a new wave of social network lawsuits similar to what we’re seeing in the smartphone space.

Between that and the tensions building up between Facebook and Google, I suspect this could be just the beginning of a wave of social networking patent fights. Remember the saying: Follow the money… and eventually you will run into the lawyers.