Silicon Valley has Facebook's back in Yahoo knife fight

There's no shortage of people rooting for Facebook in its patent battle against Yahoo -- and they say they have good reason.

Daniel Terdiman Former Senior Writer / News
Daniel Terdiman is a senior writer at CNET News covering Twitter, Net culture, and everything in between.
Daniel Terdiman
4 min read

This much is clear about the patent showdown between Yahoo and Facebook: Yahoo is losing friends left and right.

Last month, Yahoo sued Facebook, claiming the world's largest social-networking company had infringed on 10 of its patents. And yesterday, Facebook countersued, arguing essentially that it hadn't done anything wrong, but hey, as long as we're on the subject, Yahoo violated 10 of our patents.

For many in the technology business, this is just the latest chapter in a battle that most would like to see wrap up -- and quickly as possible, please. But since Yahoo was first to loose its lawyers, there's no shortage of critics in Silicon Valley who fault the company's tactics and strategy.

On the flip side, plenty say they are ready to stand with Facebook.

Asked who he supported in the showdown, Yammer CEO David Sacks--who in the wake of Yahoo's lawsuit against Facebook famously offered a $25,000 bounty to any Yahoo employee who jumps ship to Yammer by mid-May--didn't hesitate to choose sides. "Definitely Facebook," Sacks said, adding that he's certain most of Silicon Valley shares that sentiment.

"Yahoo is the aggressor," Sacks said. "Its lawsuit is highly opportunistic. It's basically a shakedown on the eve of Facebook's IPO, and they're acting the same way a patent troll would."

The irony, Sacks continued, is that usually patent trolls are companies with little or no active operations, so there's no one for defendants to counter-sue. But because Yahoo's heart is still (barely) beating, Facebook was able to catch the grenade Yahoo threw at it and toss it back before it exploded. "Yahoo would probably be better served [here]," Sacks said, "if they shut down all their operations and became a patent troll."

Some, however, think that's exactly what Yahoo has become as its years of management problems have led it to get muscled out of the way by Google and Facebook.

"Yahoo used to be an iconic company that contributed to key building blocks of the Internet as we know it," said Jeff Clavier, a managing partner at SoftTech VC, a Silicon Valley investment firm. "A decade later, and after years of management and identity crisis, it's turning into a patent troll. That is so sad."

Clavier also said that most of the people he has talked to and read are backing Facebook's position in its face-off with Yahoo, mainly because it is the "new kid on the block." But he added that he hopes the "powers that be" in Silicon Valley learn that patent lawsuits are a waste of time and energy that is "genuinely stifling innovation."

Turning their backs to Yahoo
Although Yammer's Sacks is probably the most vocal critic of Yahoo's recent behavior he's hardly the only one turning his back on Yahoo in this showdown. All across technology, people have been willing to put their names to highly charged anti-Yahoo diatribes.

And that would seem to be a reflection of how little most of Silicon Valley -- and the tech industry as a whole --thinks of companies that engage in software patent battles.

In a blog post on Monday, Hunch and Founder Collective co-founder Chris Dixon let it be known that while he usually comes down against any company that fights a software patent war, "I think Facebook made the right move by filing a lawsuit against Yahoo's patent attack."

That's because, Dixon continued, Facebook had just four moves to play on this particular chess board: Settle; defend without countersuing; Countersue "without signaling any aversion to patent lawsuits;" and "Countersue and signal that they are averse to patent lawsuits, which in turn signals that they will drop the lawsuit if Yahoo does. This seems to be what Facebook has done."

Others agree that Facebook did the right thing by not standing idly by while Yahoo tried to pick its pockets in the weeks leading up to the social-networking giant's IPO. "The Valley and the hacker community generally seem to be on Facebook's side," said Paul Graham, the founder of Y Combinator. "I'm impressed that Facebook is fighting back instead of settling to make the IPO easier, as companies so often do, and as Yahoo probably expected them to. It shows how confident Facebook is about their IPO."

Added Graham, "Yahoo has clumsily picked a fight with an opponent who is a lot fiercer than they realized."

Sacks, too, believes that there's no moral equivalency between Yahoo's suit and that of Facebook, despite the fact that both are software patent suits. That's because he sees Facebook's as justified because it's in self-defense. "Reading between the lines of Facebook's statement, it's obvious that [they] feel it would be better that both sides drop their suits [and that] they'd rather not be in this position," Sacks said.

Sacks may be strident in his feelings on the matter -- but there are others whose feeling may be even stronger.

Take venture capitalist Fred Wilson of New York's Union Square Ventures. In a blog post after Yahoo sued Facebook, Wilson did not hold back: "Yahoo thinks they can bully Internet newcomers with their bogus patents," he wrote, adding that the company had foolishly crossed a line "because other companies have bogus patents too."

"And they've opened themselves up to be sued back," Wilson added presciently. "Frankly I'd like to see it happen just to show them how stupid they are...I used to care about that company for some reason. No more. They are dead to me. Dead and gone. I hate them now."

Additional reporting by Paul Sloan.