Facebook Picked Up Friendster's Patents For More Than It Cost To Buy Friendster

from the patent-valuation dept

A few years back, there was quite an uproar over the discovery that Friendster had received a patent on the basic concepts of “social networks.” The company, which was already becoming an also-ran in the social networking space made a lot of noise about enforcing the patents against competitors, but not much came of it. However, the company did keep collecting patents. We were actually wondering about those patents a couple months ago when Amazon popped up with a patent on some basic social networking concepts. Turns out that just a month earlier Facebook had quietly bought Friendster’s 7 patents and 11 patent applications for an astounding $40 million. Of course, it wasn’t $40 million entirely in cash, but a mixture of cash, advertising and “payments for virtual goods” (don’t ask).

What’s impressive here is that the entire company Friendster had been sold just a few months earlier for… $39.5 million. So the buyer has effectively recouped the purchase price in less than a year. Impressive. As for why Facebook just wasted so much money (even if not all of it is “real”) on a bunch of patents? As Liz Gannes postulates, it’s probably just to keep the patents from getting in the way of an upcoming IPO. For a company currently valued at such insane levels, $40 million to clear an obstacle to an IPO is nothing major — especially when a portion of the deal is via in-kind services. Hopefully Facebook knows better than to start using the patents offensively, but somehow, I get the feeling this is not the last we’ll hear about these patents.

Filed Under: ,
Companies: amazon, facebook, friendster

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Comments on “Facebook Picked Up Friendster's Patents For More Than It Cost To Buy Friendster”

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Anonymous Coward says:

For those defending these patents, I find the claim that Facebook looked at these patents and deciding that it wants to implement some new technology as a result of looking at these patents to be highly dubious at best.

These patents weren’t required for anyone to think of and implement any technology they cover and so they do little to promote the progress of anything but wasted money that could be better spent on invention and innovation instead.

People should participate in

which allows people to submit prior art examples for patent applications in hopes that the USPTO will see them.

Shawn (profile) says:

Did you know that shining a laser pointer on the floor so your cat will chase it is patented? http://www.google.com/patents?vid=USPAT5443036

A method for inducing cats to exercise consists of directing a beam of invisible light produced by a hand-held laser apparatus onto the floor or wall or other opaque surface in the vicinity of the cat, then moving the laser so as to cause the bright pattern of light to move in an irregular way…

Completely unrelated but I just learned read it and posted into the first patent related post on techdirt I could find

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