Twitter Seen as Losing Yammer’s Support for Patent Initiative

Photograph by Lou Dematteis/AP Photo

Yammer CEO David Sacks, left, and Microsoft CEO Steve Ballmer announced in June that the software giant would acquire the social networking startup for $1.2 billion.

Amid the technology industry’s penchant for patent lawsuits, Twitter unveiled a plan in April designed to curb the court confrontations. The proposal, which limits how companies could use patents against rivals, had a strong ally in Yammer.

That might change.

Last month, Microsoft said it would buy Yammer, which makes social networking tools for companies, for $1.2 billion. Patent experts said it’s unlikely the software giant will handicap its new toy with the restrictive patent rules.

“I doubt that Microsoft would allow this to transpire,” Victor Siber, the former chief intellectual property counsel for IBM who’s now a partner at Baker & Hostetler, wrote in an e-mail. “Because Microsoft is a substantial target for patent litigation, it would reserve all of its options to counter sue or initiate litigation.”

Days before Twitter started talking about its patent initiative, Microsoft paid $1.06 billion to acquire more than 800 patents from AOL. Microsoft has recently engaged in several patent lawsuits, including with Motorola Mobility and TiVo.

The effort by Twitter was widely publicized as a flower-power, feel-good solution to all the litigation. The proposal came at a time when Yahoo and Facebook were still entangled in lawsuits over social-networking patents and when the mobile industry had become increasingly confrontational.

Twitter touted its proposal, called the Innovator’s Patent Agreement, as a way to prevent lawsuits from impeding innovation. It was also seen as a way to attract talent in the highly competitive market for tech workers. For companies that adopt the new rules, patents could only be used for defensive reasons unless the people named on a patent give permission for filing a lawsuit.

Carolyn Penner, a Twitter spokeswoman, declined to comment on the progress of that initiative. Mac Brown, a spokesman for Microsoft, and Shelley Risk, a spokeswoman for Yammer, declined to comment on their plans because the acquisition has not closed yet.

Some smaller tech companies still say they support Twitter’s patent proposal. For example, U.K.-based Multizone, which makes social-networking software, plans to start using the Twitter framework in patents by the end of the year, said Angus Fox, a director for the company.

Letting Yammer adopt the patent policy would be “too big a change for Microsoft given the recent history,” said Ron Laurie, a managing director for consulting firm Inflexion Point Strategy who has done work with Microsoft. “It would be very strange to me if they would follow the Twitter policy given the intense competition in that market.”

Yammer was among the first backers of Twitter’s patent initiative, along with several venture capital firms that said they would encourage their portfolio companies to adopt it. Yammer Chief Executive Officer David Sacks had earlier pledged his support in a Twitter post, and had told me in an interview then, “This is a great move. We need more thinking like this.”

Around the time Sacks started Yammer in 2008, he filed for a patent on enterprise micro-blogging, he said.  Since then, he said his company has been sued by at least one “patent troll,” which is a person or company that holds a patent portfolio for the purpose of pursuing alleged infringers.

“The system we have now will eventually destroy innovation in Silicon Valley,” Sacks said during that earlier interview. He acknowledged that adopting Twitter’s plan would devalue Yammer’s patent portfolio. “We’re willing to take the risk. We’re willing to get out in front of this and trust that we’re going to be able to attract more software developers to work with us.”

Microsoft probably won’t be as eager to take that risk.

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