Facebook gets 750 IBM patents amid lawsuit fights

San Francisco:  Facebook acquired 750 patents from International Business Machines, adding intellectual property that may help it counter allegations of patent infringement, a person with knowledge of the transaction said.

The patents cover various technologies such as software and networking, said the person, who asked not to be identified because the deal hasn't been made public. The acquisition would swell the size of Facebook's portfolio, which includes at least 56 issued patents and 503 filed US patent applications.

Facebook, the world's biggest social-networking service, is bolstering its legal defences amid a standoff with rivals that have broader intellectual property portfolios. Yahoo! sued Facebook this month, accusing it of infringing patents covering critical website functions. Facebook may have shelled out hundreds of millions of dollars for the IBM patents, said Erin Michael Gill, a managing director at MDB Capital Group LLC.

"This is a very big deal," said Gill, who is chief intellectual property officer at MDB, an investment bank focused on intellectual property. While it's not clear how strong the patents are, "Facebook is now where it's supposed to be."

The Yahoo suit involves patents covering internet privacy, advertising and information sharing. Sunnyvale, California-based Yahoo asked for an order barring Facebook from infringing the ten patents. It's seeking triple damages.

Earlier deals

Jonathan Thaw, a spokesman for Menlo Park, California-based Facebook, declined to comment, as did Ed Barbini, an IBM spokesman. Facebook already has been acquiring patents from other holders, including early social-networking site Friendster and computing company Hewlett-Packard, according to the US Patent and Trademark Office. Yahoo, Google and Microsoft all have at least 1,000 patents, according to MDB, based in Santa Monica, California.

Facebook's IBM deal could help assuage concerns the company lacks the intellectual property it needs, Gill said. The social network filed for an initial public offering last month, increasing investor scrutiny of the business.

Facebook, which had almost $4 billion (Dh14.6 billion) in revenue last year, announced earlier this month it set up a new credit line of $5 billion, replacing a $2.5 billion revolving line, to be used for working capital and other general corporate purposes. The funds also will help Facebook cover the potential legal costs of patent litigation with Yahoo, according to a person familiar with the matter.

Facebook also had 33 corresponding patents and 149 filed applications in foreign countries as of the end of last year, according to the IPO filing. The company is seeking to raise $5 billion in the offering, making it the largest internet IPO on record.