The 566 patent and Yahoo v Facebook as a whole

In order to better understand the Yahoo vs Facebook lawsuit, let us examine the patents that Yahoo is disputing. Between April 2, 1999, when the patent was filed, and Jun 14, 2005 when it was issued, the 566 patent was rejected by the USPTO four times -- twice as a "non-final" rejection, and two more times as a "final" rejection (which obviously means something quite different in the patent world). The original assignee, Overture Services, Inc., was acquired by Yahoo in 2003, midway through the process.

The 566 patent is essentially a method for optimizing click-through traffic by basing the chance of an ad appearing upon various remembered elements about users. As originally submitted, a number of these concepts were less clearly defined than in the final version -- which may suggest that Overture and / or Yahoo was adapting the relevance of the patent to emerging examples of its applicability 'in the wild'.

Important concepts in the claims of the 566 patent include:

'graphical objects as URL links,' in which advertisements are given as likely examples, but a weaker claim could argue for other uses as well
‘user identification’ is linked to clicking on the object, a refinement of the initial language
'calculated value,' 'likelihood,' 'performance data' all are associated with incorporating both user history and personal data (via product relevance) and the object's related importance based on the price of the ad -- generally applied to the size and placement of the ad on the web page
'weighting factor' is more specifically associated with the price of the advertisement (again, specifying but not restricted to ads)
'storage of performance data' (of ‘user interaction with objects,' primarily), has been refined to specify “cookies," but also generates and maintains a centralized database of information concerning each user.”

Yahoo actually has an ideal middle ground between broad assertions and specific claims. So much so, in fact, that one begins to wonder why Yahoo has chosen to invoke the 566 and related patents so seldom.

In other words, if Yahoo is suing Facebook because Yahoo is insistent that its contributions to the Internet be recognized, why isn’t everyone with an ad-sponsored web site, social network, search engine or instant messaging client already paying Yahoo?

The timing may provide a clue. Not just the well-repeated ‘get ‘em in the IPO’ theory (see below), but the possibility that Yahoo became more certain of their case once Facebook switched over to the Timeline format, which pushes the company’s Open Graph framework -- essentially, targeted advertising based on user data “graph rank” -- which would more clearly violate the 566, 111 and 599 patents, and perhaps more.

What are Yahoo’s related claims?

Facebook’s method of targeted advertising violates Yahoo patents 6907566, 7100111 and 7373599, all of which are titled “Method and system for optimum placement of advertisements on a webpage”
Facebook’s method of filtering and preventing “click fraud” violates Yahoo patent 7668861, “System and method to determine the validity of an interaction on a network”
The way Facebook allows users to preview and share ads (or other content) violates Yahoo patents 7599935, “Control for enabling a user to preview display of selected content based on another user's authorization level," and 7269590, “Method and system for customizing views of information associated with a social network user”
Facebook’s News Feed violates Yahoo patents 7454509 “Online playback system with community bias," and 5983227, “Dynamic page generator”
Facebook Pages and Facebook Groups violate Yahoo patent 7747648, “World modeling using a relationship network with communication channels in entities”
Facebook’s instant messaging violates Yahoo patent 7406501, “System and method for instant messages using an e-mail protocol”

Otherwise, Yahoo’s legal case will come down to a few of the usual suspects in patent disputes:

Novelty and non-obviousness could become a central issue. The filing dates on the patents are sufficiently early -- in many cases, centered around the turn of the century. However, the 648 patent is one exception; Facebook had already launched by the time it was filed. Plus, there are literally thousands of potential examples of prior art before 1997, Yahoo’s earliest priority date -- including several Amazon social networking patents.
“Statutory Subject Matter” remains a hotly debated area, especially following Bilski v Kappos, The distinction between patentable subject matter and abstract ideas is a major sticking point for both software patents and business methods. All of Yahoo’s patents faced rejections and required at least one amendment (as many as seven, in the case of 648 and 509) because the USPTO felt they were too broad and abstract. Yahoo subsequently added language that specifically mentioned hardware (“computer displays," “computer networks” etc.).
For these and other reasons, the date of issuance may have greater weight than usual. While filing and priority dates generally take precedence, opportunistic changes to patents can be considered as grounds to reexamine their validity. For example, Facebook launched in 2004 -- after the filing date of the majority of Yahoo’s patents, but before a number of the filing rejections and subsequent amendments. 861 in particular was a continuing patent application, a unique aspect of US patent law that allows an inventor to redefine and add claims even after issuance -- all too often, to assert ownership over a subsequent and technically novel permutation of the patent as defined.

Finally, there are additional concerns that could weigh into the legal case -- either as secondary influences upon the court’s decision, or to affect a settlement between the parties.

Deliberate use of visibility. Yahoo’s language in the suit reveals that the company is more than aware of the case’s high-profile status. In fact, it has frequently been argued that Yahoo regards Facebook as particularly vulnerable due to the upcoming IPO, and therefore more willing to make a quick settlement. Yahoo’s timing was worth around $300 million during a similar suit against Google during that company’s IPO in 2004.
Overture acquisition. A number of the asserted patents came with Yahoo’s 2003 acquisition of Overture -- at the time, one of Google’s main rivals in the online advertising sphere. In the strictest sense, it doesn’t matter whether a company actually developed or merely acquired a given technology -- but the language of the suit strongly seeks to portray Yahoo as an innovator (and, conversely, Facebook as a non-innovator), an appeal whose nuances may be questioned by the court.
Injunction rather than compensation. Count I:37 indicates that Yahoo is not primarily seeking licensing, restitution or other compensation; Yahoo is asking the court to make Facebook cease vital elements of its core business. To comply with even a part of Yahoo’s requests, the world’s top social network would face days of downtime, perhaps months of ground-up retooling to replace Pages, News Feed and instant messaging components -- and we may soon find out the dollar value that Facebook places on that kind of financial and public relations disruption.