Facebook makes its choice on YahooApril 3, 2012: 3:23 PM ET
By Chris Dixon, contributor
As I see it, Facebook had 4 choices:
1. Settle. Given its pending IPO, this would have been the easiest route. But, by rewarding Yahoo (YHOO), settling would have encouraged more frivolous patent lawsuits.
2. Defend without countersuing. On the surface this would have been the "principled" stance, but it would have severely weakened Facebook's legal position, and therefore would have made it more likely that Yahoo profited from the lawsuit.
3. Countersue without signaling any aversion to patent lawsuits.
4. Countersue and signal that Facebook is averse to patent lawsuits, which in turn signals that they will drop the lawsuit if Yahoo does. This seems to be what Facebook has done:
"From the outset, we said we would defend ourselves vigorously against Yahoo's lawsuit," Ted Ullyot, Facebook's general counsel, said in a statement. "While we are asserting patent claims of our own, we do so in response to Yahoo's short-sighted decision to attack one of its partners and prioritize litigation over innovation." [emphasis added]
Countersuing gives Facebook the best chance of fending off Yahoo's lawsuit – and therefore not rewarding patent lawsuits. And signaling it are only doing so in response to Yahoo (hence might drop the suit if Yahoo does) keeps it on the right side of innovation.
Chris Dixon is co-founder of Hunch (acquired by eBay), and is an active angel investor. Visit his blog.