facebook yahoo

Facebook Inc (NASDAQ:FB) has been all over the news last few weeks. In March,  Yahoo! Inc. (NASDAQ:YHOO) sued Facebook over alleged patent rights infringement, but in April, Facebook filed a counter-lawsuit against Yahoo, insisting that it had infringed same patent rights against Facebook. The hunter became the hunted.

So what exactly happened? Initially, Yahoo claimed that Facebook had infringed 10 patents related to advertising, pointing out concerns over the methods and systems used. However, in an event to counter Yahoo’s allegations, Facebook, accused Yahoo of copyright infringement related to patents regarding online recommendations, adverting, and photo tagging.

Troubled Stocks

Next came Facebook’s plans to raise $100 billion through an Initial Public Offer (IPO), which later proved disastrous. This lawsuit likely contributed to the calamitous IPO. It was during this period that the company’s projected revenues came into question.

Yahoo! on the other hand, has had a share of its troubles in recent past. Yahoo! recently had some big management changes, after laying-off more than 2000 employees worldwide. So generally, these are two companies in corporate quandary, which probably felt that the whole thing of going public to express their corporate wars was not doing any good to them; which likely led to backdoor arbitration.

Probable Solutions

According to AllthingsD, the proposed solution is “a massive cross-licensing of patents between Internet giant and the social networking kingpin and an even deeper integration of Facebook into Yahoo and vice versa“.  The only obstacle is that Facebook is only willing to buy the patents it feels are valuable, something that could bring hindrances going forward.

It would even be much worse for Yahoo! knowing that Facebook Inc (NASDAQ:FB) recently purchased Microsoft Corporation (NASDAQ:MSFT) patents worth, $550 million, which the computer software giant had acquired from AOL, AllThingsD notes. Despite having collected all that money from the IPO, Facebook may not be willing to pay much for Yahoo!’s patents.

Stock Activities in the Market

When Yahoo first sued Facebook, Yahoo’s stock price rallied to $15.50 within a week. However, when Facebook returned the ‘favor’ in April, the company’s stock plunged to $14.70, after which, it took an upward movement only to drop sharply on the aftermath of Facebook’s controversial IPO. Facebook on the other hand has been tanking since trading started.