Facebook's Yahoo! Patent Problem

NEW YORK (TheStreet) -- Facebook's planned initial public offering is the talk of the business media these days.

Everyone is swooning over how big it will be, how many millionaires it will create and how Facebook might continue to grow after its IPO.

I'm sorry to show up at the black-tie party wearing a Grateful Dead acid-washed T-Shirt, but what happened to Facebook violating a bunch of Yahoo!'s(YHOO) 1,100 patents in social and search?

I first wrote about this topic last November in Forbes.

As I pointed out then, Yahoo!'s patent trove has been an undiscussed part of its overall value -- although when you consider that Yahoo!'s "core business" is currently being valued at less than zero, it's hard to say that only the patents have been ignored.

Obviously, it can be difficult to assess the value of patents. Few believed that Motorola Mobility's(MMI) patents were going to be worth $12.5 billion to Google(GOOG) or that Nortel's patents were going to be worth $4.5 billion to the consortium of players who bought it in July.

Yet several people I talked to last fall thought that Yahoo!'s patents were worth a significant amount and that Facebook might be the company most at risk if Yahoo! suddenly becomes more aggressive in defending its intellectual property. (To date, it has been passive and acquiescent on this front.)

Keep in mind that Yahoo!'s own board seems to recognize the value of Yahoo!'s patents. In October, The New York Times wrote the following in a story updating the state of Yahoo!'s deal negotiations:

"But Yahoo has also talked up some of its other assets, including more than 1,000 patents, including those for search and display advertising, that the company believes would fetch high prices."

I spoke with the two New York Times DealBook reporters who wrote this story after it appeared and both acknowledged that they believed Yahoo!'s board clearly sees value in the patent portfolio.