How IP infringement is business as usual in the tech industry.

It’s the fall of 2011. Most tech coverage is absorbed in speculation around the upcoming spring, when Facebook is set to IPO. However, one man’s focus is on another giant in the search, advertising, and social networking space.

Erin-Michael Gill, Chief Intellectual Property (IP) officer for MDB Capital, an investment bank specializing in evaluating the IP of both public and private companies, realized that Yahoo! was a “treasure chest” of patents. Between 2001–2007, Yahoo! was granted on average 40–50 patents per year and continued to ramp up their IP efforts with 310 in 2010 (Jackson, 2011). Gill valued the company’s IP separately from its core business with applications in paid search, display, and social networking. This means he felt the IP could be sold separately to the company. In its 1,100 patent portfolio, there was pay-per-click advertising, display ads, social networking, data center management, unsolicited email processing, and digital content creation and distribution (Jackson, 2011).

In 2004, Yahoo! almost derailed Google’s IPO by suing over the violation of its GoTo.com pay-per-click advertising with Google’s AdWords model. Considering that Google had made $29B in revenues related to the GoTo.com patent (Jackson, 2011), many assumed that Yahoo! would drag out the lawsuit for maximum benefit. So it shocked many when they settled only weeks before Google’s IPO date for shares of stock.

With the Facebook IPO on the horizon, Gill also began comparing the two companies’ portfolios. He quickly realized that the exponential and unprecedented growth of Facebook seemed to be built upon Yahoo!’s technology.

“Their {Facebook} patent portfolio didn’t really map to what they were actually developing…Yahoo! had roughly a 1000 patents and Facebook had less than 100…and how often Facebook was citing Yahoo! was more than 2 to 1” — Erin-Michael Gill (TechCrunch, 2012)

Gill predicted that when Facebook would be at its most vulnerable, i.e. before the public offering, this IP risk would come to the forefront. Unlike many mainstream media outlets at the time, Gill was not surprised when Yahoo! filed this lawsuit…