plans to apply for about 20 times more U.S. patents next year than it did in 2002, the last sign that the 10-year-old company born in the dot-com bubble is becoming more mature.
"During the first five years of the Internet era, the focus of most of the companies were on getting out there and just building enough visibility. There was no time for almost anything else," said Joe Siino, Yahoo!'s vice president for intellectual property, in an interview. "The company is of a size and a maturity that it can really begin to capture for the long term its innovation more."
Yahoo!, which spends about $500 million annually on research and development, declined to release specific figures on its patent applications, which take about two to five years to gain approval. The company is looking to license its patents but doesn't plan to pursue that as a business, Siino said.
Earlier this year, Yahoo! opened a research facility at the University of California at Berkeley. Rival
has a similar partnership with neighboring Stanford University. Yahoo! said today that it hired scientist Andrei Broder from
. He will report to Yahoo! research head Prabhakar Raghavan.
"The clear reason for this increase in patent applications is Yahoo! has been hiring computer scientists," said Mark Stahlman, an analyst with New York-based Caris & Co., who rates Yahoo! shares a buy and doesn't own them. "This is a reflection of the decisions made over the last few years at Yahoo! to increase their investment in technology."
The company is securing its intellectual property because the Web is changing rapidly as more advertisers shift their spending online and the use of search explodes.
In addition, patent litigation can be costly.
Research In Motion
faces the potential of paying hundreds of millions of dollars or having its Blackberry system shut down because of a long-running dispute with the patent holding company NTP.
Internet companies are now applying for "more serious patents" than they did before, said Jeffrey Neuburger, a partner with Brown, Raysman, Felder & Steiner in New York, in an interview.
"Even during the dot-com boom, there was a lot of money spent on patents," he said. "Startups were patenting whatever they could, really for the purposes of showing investors that they had value."
That's no longer an issue for Yahoo!. The company has a market capitalization of about $60 billion. Its shares are trading at near a 52-week high amid renewed investor enthusiasm for the Internet sector. They fell 69 cents to $41.54 on Friday.