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Summary:

Facebook bought the entire Friendster portfolio of social networking patents earlier this year. The company bought the patents from Friendster acquirer MOL in a deal that included advertising,a partnership for payments for virtual goods and cash, and was valued at $40 million.

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Facebook bought the entire Friendster portfolio of social networking patents earlier this year. The seven patents and eleven patent applications had been transferred to MOL Global when it bought Friendster for about $39.5 million late last year. Facebook then negotiated with MOL to buy the patents in a deal that included advertising, a partnership for payments for virtual goods, and cash, and was valued at $40 million, according to a source familiar with the matter. Record of the transfer, which occurred May 13, can be found here, and the awarded patents are accessible here. Facebook confirmed to VentureBeat that it had been assigned the patents.

Diagram from a Friendster patent covering user compatibility scoring in a social network

The Friendster patents, which date back to the early days of social networking, are incredibly broad. They cover things like making connections on a social network, friend-of-a-friend connections through a social graph, and social media sharing. Friendster had received its first patent back in 2006, when it was already on the decline. At the time, Friendster President Kent Lindstrom told me the company had nearly forgotten it had ever applied for the patents, but added that “We’ll do what we can to protect our intellectual property.” From then on, Friendster frequently mentioned its patents as an asset, but to the best of our knowledge it never actually tried to enforce them.

At $40 million, the Friendster patents are one of Facebook’s largest acquisitions ever, on par with its FriendFeed deal. However, that money is trivial if there’s any chance MOL or someone else would have used the patents against Facebook. Especially with an IPO somewhere in its future, it was important that Facebook remove any shadow of a doubt that someone else had the rights to the intellectual property behind its core technology.

While MOL’s Friendster buy might not be the hottest property ever — the social network’s strongholds in Singapore, Malaysia, Indonesia and the Philippines are quickly being conquered by Facebook if they haven’t been already — the patent deal made MOL its cash back in the span of months.

It’s unlikely that Facebook would use the patents against other companies in the space rather than trying to out-compete them, though it now has the option to wield intellectual property as a weapon. There’s a historical reference for taking patents out of the market; the Six Degrees of Separation patent, obtained by the eponymous failed social networking startup, was bought at auction in 2003 by Reid Hoffman and Mark Pincus — in part to keep it away from Friendster, the market leader at the time.

Please see the disclosure about Facebook in my bio.

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  1. amazing, the power of money .. i can buy a patent, and then enforce it .. something wrong in that, but it is the current way of the world

    1. I would venture to say it’s pretty weird that such broad patents were granted, given how basic they are to such a (now) widespread concept, but that’s the way the system works.

  2. if these patents are worth anything they could have licensed to FB for the same price. More “inevitable evolution?”
    http://www.allfacebook.com/2010/02/facebook-feed-patent/

  3. Interesting read! It’s probably more for their security more than anything, at least they’re doing preemptive measures for their brand’s longevity.

  4. Through Strategic Deal with Friendster’s New Owner, Facebook Expands Patent Portfolio Wednesday, August 4, 2010

    [...] and patent applications from MOL, the Malaysia-based new owner of Friendster, as VentureBeat and GigaOm reported today, with a source telling the latter publication that the deal was part of a larger [...]

  5. In the face of its inability to innovate, Friendster’s last hope was its patents. Now those are gone, too.

    Oh well. Cashing out for $40 million right now is better than patent trolling for the rest of your existence.

  6. Facebook Buys $40 Million Worth of Social Networking Patents Thursday, August 5, 2010

    [...] networking patents over the last decade. According to VentureBeat, there are 18 patents in all; GigaOm reports the price of the portfolio was $40 million.As with many technology patents, the Facebook [...]

  7. Facebook Buys $40 Million Worth of Social Networking Patents | The Atlanta Post Thursday, August 5, 2010

    [...] networking patents over the last decade. According to VentureBeat, there are 18 patents in all; GigaOm reports the price of the portfolio was $40 [...]

  8. Is this to add to there already growing total of over 951 other patents they hold?
    http://www.boliven.com/patents/search?q=Facebook

  9. Google vs. Facebook « IdeaSprig Blog Thursday, August 5, 2010

    [...] sense the impending battle and have begun provisioning themselves to hunker down. Check out this Gigaom post about their recent acquisition of Friendster’s patents for social media functionality. These [...]

  10. FacebookがSNS関連の特許を4000万ドルかけて取得 – IT / テクノロジー | TechDoll.jp Thursday, August 5, 2010

    [...] FacebookがSNS関連の特許を4000万ドルかけて取得 Facebookがソーシャルネットワークのソーシャルアプリで思いあたる機能をだいたい網羅した特許を取得した。フレンドリストやニュースフィードなどが含まれる。特許はFriendsterから買ったもので、Friendsterはこれまでにソーシャルネットワーク系の特許をいくつも取得してきている。VentureBeatによると、すべてあわせて18の特許があるという。またGigaOmのレポートによると、購入額は4000万ドルだそう。 [...]

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