From the start, Facebook (NASDAQ:FB) has been a magnet for litigation. Part of this was the result of Mark Zuckerberg’s loose approach to running a business; he had little choice but to be strike expensive settlements with folks like Eduardo Saverin and, of course, the Winklevoss brothers.
Since then, Zuckerberg has built a strong legal team, which has been critically important. The litigation has continued — Facebook has a huge cash hoard that has certainly attracted the attention of plaintiffs attorneys — but at least it can better defend itself.
One of the latest suits is from Timelines.com. The company has a trademark on the name “timeline” and claims that Facebook is infringing on it. Today the suit will go before a jury in a Chicago federal court, according to a report in Bloomberg.
It’s really a David vs. Goliath fight. After all, Timelines Inc. is a tiny company with only 94,000 monthly users … and Facebook has over 1 billion users.
Now, if the company loses, it could be on the hook for serious damages and would have to give up the timeline name. But then again, Facebook will inevitably appeal any decision, which could delay things for years and prove to be very expensive for Timelines Inc.
Plus, perhaps the biggest problem is that the company may have a dicey case. The name timeline is fairly generic, which could make it tough to protect. Even though the company obtained a trademark, it could still be invalidated. Keep in mind that the U.S. Patent and Trademark Office is understaffed and must deal with huge volumes of filings.
Heck, if anything, the situation is likely to get worse because of the cutbacks and sequester.
In light of all this, Facebook probably has little to worry about … although it’s a good bet we’ll continue to see lots of litigation for the social network. It’s just the inevitable result of being a highly successful tech company.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities, and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.