Facebook warns Yahoo lawsuit could have 'material' impact

With its mammoth IPO still on the horizon, Facebook acknowledges that the Yahoo patent lawsuit could cost it dearly.

Facebook campus in Menlo Park, Calif. Charles Cooper/CNET

They may have pooh-pooed it in public, but Facebook's amended initial public offering filing warns that its patent litigation battle with Yahoo could have a "material" impact.

On March 12, Yahoo filed a lawsuit against Facebook, claiming that several of its products infringed upon ten of Yahoo's patents relating to "advertising," "social networking," "privacy," "customization," and "messaging."

Yahoo is seeking unspecified damages, a damage multiplier for alleged willful infringement, and an injunction. We have not yet filed an answer or asserted any counterclaims with respect to this complaint. We intend to vigorously defend this lawsuit. This litigation is still in its early stages and the final outcome, including our liability, if any, with respect to these claims, is uncertain. If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition, or results of operations.

The company also highlighted how its business may be harmed if the "numerous class action lawsuits and other litigation matters" it's involved in go against Facebook. Sum up the company narrative along the lines of "hey, everyone wants a piece of us these days" as Facebook now has hundreds of millions of users. "The plaintiffs in class action cases filed against us typically claim enormous monetary damages even if the alleged per-user harm is small or non-existent," the filing noted.

Call it the flip side of life in the fast lane.

About the author

Charles Cooper was an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet.


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