Tuesday, 27 September 2011

Why Should Facebook and Twitter be Worried

In one of my earlier post, I had mentioned about the patent portfolio of Facebook and Twitter and discussed why it was imperative for both the social networking giants to lay more emphasis on their respective Intellectual Property. While Facebook has few patents to showcase, Twitter has absolutely no form of patent protection (almost). I did some basic Googling to determine the number of lawsuits filed by various parties against Facebook and Twitter and realized that the number of patent infringement cases against both Facebook and Twitter has witnessed a sharp increase in the last two years. The table below summarizes all the patent litigation cases which have been filed against Facebook. As one can observe, Year 2007 saw two patent litigation against Facebook and Year 2009 saw a total of five patent litigation cases being filed against Facebook. The number of litigation cases increased to eight in the Year 2010 and fifteen in the Year 2011. The increase in the number of litigation should come as a wake up call for the social networking giant to enhance its patent portfolio in order to protect its technology.

Many would suggest that one way to face the challenge of contesting the increasing number of litigation is to acquire smaller companies that have a good patent portfolio or license the key patents from patent owners (less favorable in the current context). Facebook has acquired many startups and small companies and the list of such companies acquired by Facebook is provided here. In the list, one can observed that only the following two companies acquired by Facebook have their own set of patents, the rights for which were subsequently assigned to Facebook after the acquisition.
Friendster 10 patents and 10 patent applications
ShareGrove: 1 Patent application

A look into the assignment history of patents on the USPTO website discloses that many patents from companies such as Walker Digital LLC (which also sued Facebook on a number of occasions), Divan Industries, Hewlett Packard and British Telecommunication Public Limited Company have been assigned to Facebook indicating that Facebook has bought those patents from these companies. In the future, Facebook will have to be even more strategic while acquiring any company else many companies will continue suing Facebook demanding royalties for infringing their patents or asking Facebook to license or buy their patents.

The table below summarizes the patent litigation cases for Twitter. Like Facebook, Twitter has also witnessed an increase in the number of patent infringement lawsuits filed against it in the Year 2011. To make matters even worse, Twitter does not own any granted patents. A cross-check on assignment history discloses that Twitter has only one patent application (20100199180) assigned to it by Tweetie LLC, which it acquired in 2010. The list of acquisitions by Twitter is disclosed here. However, it seems that none of the companies acquired by Twitter own any patents.

So what should be the next step forward for Twitter and Facebook? Should they be focusing more on acquiring companies or building a stronger patent portfolio. If they should be acquiring companies, what type of companies should they be targeting? Whatever be the case, there will not be any decrease in the number of patent litigation cases against both the social networking giants.

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