Social Networking and Patents – Where does Facebook Fit?

With Facebook’s IPO looming, many investors are asking whether Facebook has protected the technology that has allowed it become the world’s most popular social networking platform.

Interestingly, Facebook’s IPO filing paperwork states that the company has 56 US patents and 503 pending US patent applications. A search of the USPTO database only shows 20 patents and 19 patent applications assigned to Facebook.  The USPTO database releases a patent application for public viewing eighteen months after it is filed.  This suggests that Facebook either (1) made an aggressive push to file patent applications in the last eighteen months prior to filing its IPO and/or (2) it acquired a number of companies with recently filed patent applications and issued patents.  We think it is likely a combination of both.

Facebook’s patents are scattered across different technologies, from network bandwidth management, user authentication and privacy controls, to pattern detection and custom content delivery. Facebook has been successfully patenting some of its proprietary and popular features, such as the technology behind its News Feed, Timeline, in-network messaging, and digital media tagging features.

In late 2010, Facebook acquired Friendster’s social networking patent portfolio from MOL Global. This portfolio included 7 US patents and 4 pending US patent applications. These patents seem to include many core social networking technologies – such as connecting users through various relationships, managing social connections, content uploads, multimedia aggregation and sharing social network database information with third-parties.

This move by Facebook was very strategic, ensuring that as the owner, these early social networking patents could not be asserted against Facebook in the future.

However, regarding monetization and revenue generation, Facebook has not made a big push towards patenting technologies around its advertising platform. Facebook has only a single pending US patent application related to advertising, US20100257023A1, which is directed towards targeted advertising based on user interests.

This area is where Facebook may have problems down the road. Yahoo has close to 900 patents related to its proprietary search engine algorithms and systems for search engine monetization, technologies that are likely to be utilized by any online search, advertising, and content delivery platform.

In addition, Microsoft and IBM own core patents surrounding file sharing, messaging, and back-end infrastructures for social networks and collaborative online communications.  Each of these companies own about 80 US patents and hundreds of pending US patent applications in this space.

There is some comfort for Facebook, however, as Microsoft has a 1.6% stake in Facebook, and Microsoft’s Bing search technology powers Facebook’s search engine. This will likely preclude Microsoft from asserting its patents against Facebook, as long as the two companies mutually benefit from this collaboration.

Google has been quietly developing its own social networking technologies ever since Facebook was launched, having 25 US patents and 40 pending US patent applications before the USPTO in this space, the earliest of which was filed in 2004.  Google recently re-entered the social network scene with the launch of Google Plus after its first ill-fated social network, Orkut, failed to entice US users away, at the time, from MySpace.

Apple, not to be left behind, has 35 US patents and 76 US patent applications that relate to various aspects of social networking and collaboration. Many of these technologies seem directed towards mobile social networking, giving insight into where Apple believes the social networking space is headed.

Previous social networking icons MySpace and Friendster seemingly gave little importance to patent protection, each having less than a dozen issued patents and a handful of pending applications securing their technologies. Other popular companies in the social networking space today face similar issues, with Zynga having 9 pending US patent applications, LinkedIn owning 1 US patent, and Twitter having no issued US patents or pending patent applications.

Facebook appears to be bucking this trend, with aggressively patenting its own proprietary technologies related to the features that have made it popular (as evidenced by its 500+ pending US patent applications), as well as owning core social-network technologies by acquiring the Friendster patents. However, established technology companies such as IBM, Yahoo, and Apple that own technologies related to advertising and monetization, as well as social messaging and communication, may have several strategic options by which to leverage their own patents, be it through licensing to, or asserting their patents against, Facebook.

*Patent applications are made publicly available 18 months after they are filed at the USPTO. Thus, the above commentary does not take into account any patent application filings at the USPTO by Facebook or others within the last 18 months.

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