Goodbye Yahoo! It was nice knowing you.

Mark the date of February 28, 2012 as the official death of Yahoo!. Sure there are still people there collecting paychecks and day traders making a buck or two playing games with the stock price, but today Yahoo! waved the white flag.  How so?  Well, today it was announced that Yahoo! has become yet another patent troll by threatening to sue Facebook.  In other words, Yahoo! has admitted that it can’t compete, can’t innovate, can’t figure a way forward and thus will hire lawyers to be its revenue generation engine.  Kara Swisher properly calls it the “Kodak Strategy.”

I can’t begin to even explain how profoundly disappointed I am with Yahoo’s decision.  It wasn’t just the way the started this war (classless) or their choice of timing (blatantly opportunistic), but the fact that they have opted out of the club of companies that are innovating and creating jobs for this country.  No longer should we mention them when talking about the Internet stalwarts or listen to anything they think about policy or innovation.  Because they won’t / can’t compete and now decide to sue instead of taking responsibility for their current situation.

I would argue as a shareholder the most responsible thing for Yahoo! to do is to liquidate the company and put the patent assets in a trust that will pay out over the next X years.  Clearly, if they aren’t going to compete why stay in business?  Why do they employ engineers, product managers, marketing folks, etc. when good startups can use these talented people?  As a citizen of the Internet, I also urge a boycott of the company and the decisions makers behind this when they go to look for their next job.

Goodbye Yahoo!  As an early adopter and sideline cheerleader of you for the past 15 years, you’ve managed to destroy all of your goodwill in one stupid, poorly thought out and evil move.

  • Demonstr8r

    I agree that Yahoo is largely irrelevant, but many major, minor and irrelevant companies are suing each other over possible patent violations. It’s a feeding frenzy that is making some lawyers rich. I’m surprised Facebook isn’t suing Apple over the name FaceTime, since it tried to claim any word or phrase with the word Face in off limits to the entire planet.

  • Shouldn’t the Federal govt be bailing them out? ; )

  • Dylaninthedeep

    Your article demonstrates ignorance about the term patent troll. A company practicing patents and asserting them against a competitor is the exact OPPOSITE of what a patent troll does, which is to purchase patents just for the purpose of extorting money from a company they dont compete with. And your other comments are similarly ignorant. Why do you assume asserting patents and innovating and creating jobs are mutually exclusive? They are not. Have you noticed the patent wars currently being fought in the smartphone arena? Have all those companies given up?

    • jasonmendelson

      Your tone demonstrates an ignorance far greater than one you acuse me of. You need to do some reading reading on the subject. Patents are solely, by the constitution, given to spur innovation. Trollish behavior includes all behavior which is simply designed to be a shakedown, not a protection of real IP. The timing, the method (contacting the NYTimes even before calling Facebook) and the inability to compete completes the story of Yahoo! acting like a troll. Asserting real patents (bio / medical, physical goods, etc.) are a very different case than the business method and software patents that Yahoo! is probably asserting here. (We’ll have to see when the court papers are filed). My bet is that they will asset ideas around social networking that they never used and now, since they can’t compete, will aim to use against the company that actually innovated in the space.

      • Dylaninthedeep

        No, I don’t need to do any reading on the subject because I am a patent attorney. So, you’re against all software and business method patents, well take that up wth the courts and legislature. But given how much innovation takes place these days in the computer and internet arenas, do you really want a system that permits unfettered copying? (and no, trade secret protection is not enough because most inventions in this space are plainly visible). Why should any company spend millions of dollars innovating if everyone else is just going to copy their work? Also, how do you know that a) Yahoo never practiced the patents they are asserting, and b) Facebook’s very use of the inventions they cover isn’t part of the reason Yahoo “can’t compete”?

        • jasonmendelson

          I will take under advisement that admission to the bar means you don’t have to read anymore. Go back to the constitution and really think deeply about what the patent system is supposed to be for. Then go out and talk to software entrepreneurs and ask if they innovate because of the patent system. The answer is no and there is a lot of academic research that backs up my dozen years in the industry. Facebook hasn’t done anything in the social networking space. So, I believe if you just tell your engineers to patent a lot of stuff that you don’t use / don’t intend to use and then sue folks, you are a patent troll.

          • L V

            Jason — setting aside the mildly bumptious tone of the guy’s original post, I think he brings up a reasonable point.  Yahoo! didn’t purchase these patents in a portfolio, which is pretty much the definition of a patent troll.  (Google’s acquisition of Motorola fits that model a lot more, actually.)  Rather, these patents cover technology that Yahoo! created.

            Now, it may be that software and business methods shouldn’t be patentable subject matter — but I’m not sure it’s fair to blame Yahoo! for defending its software patents once it’s been decided that they are.  (Suppose you’re an African-America conservative who opposes affirmative action.  Are you nonetheless wrong to benefit from it?)  Indeed, Yahoo! arguably has a duty to its shareholders to defend those patents if it’s otherwise out of strategic options.

            This may very well be a “Kodak strategy” on the part of Yahoo!, and I think it’s pretty clear Yahoo! made  a serious mistake in spurning Microsoft.  But in the here and now, what alternative course does Yahoo! have?  And why single out Yahoo!, when so many of these tech companies are suing one another for infringement?  The real problem is patent thickets.

          • jasonmendelson

            I don’t necessarily disagree with you in general. The thickets are a mess. The USPTO is well… suboptimal. But, I still disagree that companies should patent just to patent and not because they are intent in developing and launching new products. From what I understand Y! Patented a whole bunch of stuff and never innovated or brought out a new product. They sat around, payed lawyers and engineers to patent, but not to innovate.

            What should Y! do? I could argue they have a fiduciary duty to their shareholders to sue. But it doesn’t mean that I have to like it or respect them for it.

            Sent from my iPad

        • Dylan, your one line perfectly sums up the troll side of the argument.  “I don’t need to do any reading on the subject because I am a patent attorney.”

          You should consider patenting that: “A System and Method of head-burying based on historical knowledge of unrelated events.”  I hear the USPTO is rapidly burning through their backlog and are sure to recognize this as a novel innovation.  In fact, I think the USPTO may already be in violation of your IP.

  • Very, very sad. I had the opportunity to go toe-to-toe with these guys during the rise and sale of Lycos. They were incredibly innovative and it seemed like we were one-upping each other every week for nearly a four-year period. Their tech prowess pushed us to be a great company and was one of the reasons we sold for a major-league premium. ‘We made each other better.’ That’s how true innovation works – inspiration and paranoia in the field of competition. Couldn’t disagree with Dylan more. They could have done this years ago if they indeed felt threatened. Look at the timing and it says it all to me. You’re 100% right. This is a shake down – or to use an old school term – “greenmail”. Yahoo is a huge entity that now is going to try to innovate via cost cutting and patent litigation. Sorry boys. Doesn’t work that way. 

  • Thesndr Pierson

    *Totally* agree with you.  Die die die Yahoo!
    (and yes – I own 3 patents, and I’ll be signing up for the “Twitter Patent Hack” too)