For Snapchat, Geofilters are an important feature when it comes to making money. According to Snap’s IPO filing, over $360 million of the $400 million in revenue that the photo-sharing platform earned was from selling photo filters or “Geofilters” based on location. But what’s interesting to note is that until at least a month ago, the company did not even own the patent for them.

Snapchat geofilters
KiNG_PEEWEE / Pixabay

A big win for Mobli

Serial entrepreneur and investor Moshe Hogeg sold Mobli’s Geofilters to Snapchat for a large amount of $7.7 million, says TechCrunch, citing multiple sources. Hogeg, co-founder of Mobli, reportedly signed the deal earlier this month.

This is probably the first time that an amount as big as $7.7 million is being paid for a patent from the Israeli tech industry, notes TechCrunch, which was able to get its hands on the email sent to 100 shareholders of Mobli. The previous best for Israel was a $2.7 million patent related to Google Maps.

The patent sale marks a big milestone for Mobli. This success came after four failed products, over 23 million users (at its peak), $86 million in funding and six long years. There was a time when Mobli was considered one of the leading rivals of Instagram. Last year, after its last product Galaxia failed, the company closed down and entered bankruptcy.

Mobli, which was founded by entrepreneur brothers Oded and Moshe Hogeg, patented the idea of Geo-photo filters in 2012. At that time, the “Geofilters” patent was called “Methods and Systems of providing visual content editing functions,” notes news site E27.

As of now, there have been no comments from Moshe Hogeg on the matter.

Why Snapchat wanted the “Geofilters” patent from Mobli

Snapchat badly wanted the patent, which covered features for server-side filters and photo filters, to protect itself from any future legal actions and lawsuits. The original patent was approved in 2014, a long time before Snapchat even planned the Geofilters feature. This means that the social network was already infringing upon Mobli’s patent.

In addition, the company acquired the patent because Geofilters are an important part of its revenue. For instance, Snapchat recognizes sponsored campaigns by Wendy’s and Starbucks which use Sponsored Geofilters and create value for the advertiser.

One source reportedly told TechCrunch that Mobli first discussed selling the Geofilters patent to Facebook. But other sources deny that Facebook was offered any such thing. Nevertheless, had Facebook bought the patent from Mobli, Snap would not have been able to generate such revenues from Geofilters. Simply put, Snap could have been out of business, which Facebook probably wants. The social media giant, which once wanted to acquire Snapchat, has been frequently copying its features.

Snapchat has been regularly coming up with new features based on filters. Recently, it introduced 3D filters which allow a user to place 3D objects in a space before taking a picture or video.

“After we saw the popularity of the Geofilters product, we opened the creation process to our community, who now create many Geofilters for all sorts of public and personal places and events. On average, more than a billion Snaps with Geofilters are viewed on our application every day,” the company said in a filing.