Is some patent medicine the prescription Friendster needs to get back on its feet?
A pioneer in the area of online social networking, the company and its Web site quickly fell from grace. Now it's hoping that a combination of site improvements and a newly granted patent--with others waiting in the wings--can help it get back into the fray.
The patent is what's garnering Friendster its new notoriety these days.
Granted in June, the patent (7,069,308) describes the use of online computer systems to help people connect and communicate with each other, and to see and manage those relationships, "within social networks." It had been filed in June 2003.
"We'd expected the patent for a long time and we were spending a lot of time on it," said Kent Lindstrom, Friendster's president. "It underscores we're a thought leader in this space."
Critics worry that besides conferring some bragging rights, the patent or others that Friendster might be awarded also could provide some legal leverage to the company if it decides at some point to sue rivals, from the massively popular MySpace on down.
Lindstrom has remained tight-lipped about where the patent will take the company. He has said that while it is necessary for a business to protect its intellectual property, it is equally important to compete in the marketplace.
"You don't just rush into suing people," he said. "We're exploring our position now."
The industry's wariness is understandable. Patent lawsuits have become a flashpoint for the tech sector in recent years. Critics charge that plaintiffs in such cases are often resting their claims on overly broad wording or are simply out to make a fast buck through the court system rather than by actually creating a useful technology.
Initial concern over the Friendster patent did subside somewhat as people began to look a little farther back in time. The now-defunct network Six Degrees had received its own social-networking patent in 2001, on a request filed in 1997--a half-decade before Friendster founder Jonathan Abrams requested his.
Friendster's patent, unlike the broader one from Six Degrees, focuses on a particular search method, another possible out for any potential defendant.
"My understanding is that MySpace doesn't have this search feature," said Chuck Miller, a patent attorney at Banner & Witcoff. "The Friendster patent doesn't cover the whole online system for meeting people. The scope of the patent is limited to the online search that involves the maximum degree of separation and the people that fall within that category."
The Six Degrees patent, which is cited at the top of the Friendster patent, was analyzed as part of Friendster's patenting process, Miller said. Now owned by a mildly successful network called Tribe, it covers a system for establishing relationships that involves e-mail, and it also includes related hardware.
"People often focus on the title of a patent," he said. "They think the patent covers something broader than it does."
Living in a MySpace world
Whether Friendster ever does decide to sue may depend on improvements the company is making to the Web site itself, and how well those go over with Internet users. Any business hoping to find success as a social-networking venue has to contend with a crowded field, dominated by MySpace but burbling as well with a variety of new sites.
According to Alexa, which tracks online companies, Friendster has experienced some healthy growth in the past six months. Since February, when the network began implementing changes, its daily reach rose from 3,000 to nearly 9,000 out of 1 million Web users. MySpace remained essentially steady, slightly upping its reach from 30,000 to roughly 35,000, while up-and-comer Bebo climbed from 750 to 1,400 users per million.
Last month, MySpace laid claim to being the most-visited U.S. Web site, accounting for 4.5 percent of all Web site visits (though Yahoo's overall array of sites remained larger), according to research firm Hitwise. Among social-networking sites, Hitwise said, MySpace accounted for 80 percent of all visits, well ahead of second-place Facebook, at 7.6 percent.
MySpace isn't just big among teens, its primary audience. It's also been swept up by big business, having been bought last year for $580 million by Rupert Murdoch's News Corp.
"Just because you're a pioneer doesn't mean you have the best product," said Charlene Li, an analyst at Forrester Research.
"Friendster grew too fast," Li said. "They had this great profile page, but that was it, whereas MySpace kept adding features and expanding the core culture network."
Creativity and expression quickly became the standard by which one's identity and connections were established. On MySpace users had complete profile freedom. They could blog and upload graphics, MP3s and videos onto their profiles. They could open accounts for pets, clubs and organizations, even beer.
By the fall of 2005, Friendster was short on capital and looking to be bought.
"We were in debt late in December," Lindstrom said. "It was the classic sort of running-out-of-money situation."
'Too soon to give up'
The company got a shot in the arm in February when venture firm Kleiner Perkins Caufield & Byers invested roughly $3 million, based on what it saw as an untapped potential for profitability.
"There was real revenue and there was a team that was committed. It's a Web site people use, so there were plenty of assets and value there," said Russell Siegelman, a partner at Kleiner Perkins. "They were one of the earliest in the social-networking game, and it was too soon to give up."
With its patent pending, Friendster implemented a two-part fix, with a simultaneous revamping of the site and a restructuring of the company to propel itself back into profit mode. The company cut staff from 50 to 27 employees, bringing onboard a new crew of engineers to address the technical hurdles that had become the company's legacy. At the same time, Lindstrom was promoted to president.
Much-needed changes to the Web site were implemented quickly. Users were provided with a customizable profile page. The ability to add videos with the push of a button, rather than by placing code on the edit page, was unveiled in June.
An automatic friend update, which is a chronological list of activities within a user's network--such as a friend posting a new photo or blog--now appears on the profile page as well.
"Our users are older, busier," Lindstrom said. "They have lives and they don't want to spend that much time looking for things. They want us to deliver it to them."
More patents on the way?
And then there are the patents. Roughly a month after Abrams filed his first patent request, he submitted 11 more.
"The first patent is the broad one; the rest are more technical," Lindstrom said. "I can't really disclose what they are."
He did say that the remainder of Friendster's patent portfolio involves bits and pieces of social networking, including details on methods and technology for uploading material onto a profile page.
Should Friendster choose to use its potential patent leverage, it would be throwing itself into the middle of a burgeoning culture clash.
"The patent world is all about exclusivity and the right to stop somebody from doing something that you have a legal right to control," said Daniel Westam, head patent litigator at Morrison & Foerster. "The Internet is all about openness and freedom, a 'no one can stop me' attitude and so the intersection between patents and the Internet has been very disruptive."
Westam said that patents have become a greater force in conjunction with the multibillion-dollar businesses that seek them.
"The businesses that a patent potentially affects have grown very large, so the potential damage and impact of a patent has also grown," he said. "So if you sue Microsoft now on a software patent, you're suing a $50 billion dollar business. The same is true if you sue Google on an Internet advertising patent--the potential recovery is much greater."
Lindstrom maintains that Friendster's claim as inventor of the social networking phenomenon is "solid" and that whatever lies ahead, the going won't be a cakewalk.
"We still have a lot of work to do," he said.