Patent Boost
Facebook placed a large focus on strengthening its patent portfolio before going public to protect itself from potential infringement cases, according to Envision IP. The social network acquired about 750 patents from IBM and another 650 from Microsoft Corp. prior to its IPO, Envision IP said in a Sept. 13 note.
While LinkedIn Corp., the professional-networking website, and Zynga Inc., maker of the online social game “FarmVille,” both went public with two or fewer patents, they were each profitable before their IPOs. Twitter’s net loss widened to $133.9 million in the first nine months of this year.
Twitter has been named in more than a dozen patent- infringement lawsuits, according to data compiled by Bloomberg. So far, it has successfully fended off the cases.
In August, Twitter won a U.S. appeals court ruling that it didn’t infringe a patent owned by Eaton Corp.’s Cooper Notification for a mass messaging system. In April 2012, it won a jury verdict that it didn’t infringe patents owned by closely held VS Technologies for a way to build virtual communities.
TechRadium Inc., a closely held company that provides a system for emergency response services, sued in 2009 after municipalities said they were opting for Twitter’s system. The two sides settled in December 2010, according to court records.
Patents Pending
Twitter may have access to eight more patents through its recent acquisitions of TweetDeck, Bluefin Labs and Dasient, though these patents have yet to be legally assigned to the company, according to Envision IP’s research note. Twitter also said in the regulatory filing that it has about 95 patent applications pending in the U.S. and abroad.
The company’s lack of offensive litigation could cut down on expenses. Each patent lawsuit can cost as much as $5.5 million, depending on the size of IP at risk, according to a 2013 study by the American Intellectual Property Law Association.
“It does help the company to reduce the litigation costs to reduce patents,” said the University of Michigan’s Adriaens. “You need to have enough to project confidence to investors in terms of what you have in the way of intellectual property.”