With the Facebook IPO a couple months away, Yahoo (NASDAQ:YHOO) has filed a lawsuit to blunt the company’s momentum. The complaint alleges infringement on 10 patents, which cover areas like personalized advertising, messaging and social networking.
Of course, litigation is rife in mobile, as seen with the fights among fierce rivals like Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG). So why not the same in social networking? After all, there’s plenty of value in the market. Some of the new multibillion-dollar companies include LinkedIn (NYSE:LNKD), Pandora (NYSE:P) and Groupon (NASDAQ:GRPN).
It’s far from clear what the outcome will be with the Yahoo suit. But one thing’s pretty clear: It is unlikely to stop Facebook’s public offering. Instead, the outcome is likely to be some type of monetary settlement — after all, Facebook has no lack of capital to make the Yahoo lawsuit go away.
The real lasting problem could be for startup companies in social networking, who now might have to fear being the targets of litigation themselves. With small, private funding, many don’t have the resources to fend off attacks, and their creative ventures might be cramped as a result.
– Tom Taulli, InvestorPlace.com