Facebook amends IPO a third time, warns about Yahoo a second time

In its third IPO amendment, Facebook has added information about Yahoo's lawsuit (now that it has officially been filed) and noted it has called a motion to dismiss Paul Ceglia's lawsuit.

Facebook today updated its filing for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC). This is the third time it has done so, and two updates stand out in the amendment; both of them are legal matters: Yahoo's impending patent lawsuit against Facebook and Facebook's motion to dismiss Paul Ceglia's lawsuit.

When Facebook amended its IPO filing the second time earlier this month, the company briefly mentioned its potential legal battle with Yahoo. This was soon after Menlo Park received a letter from Sunnyvale, but still before Yahoo sued Facebook over 10 patents (which is why 13 are mentioned instead of 10, and why Facebook says Yahoo still hasn't sued):

We presently are involved in a number of lawsuits, and as we face increasing competition and gain an increasingly high profile, including in connection with our initial public offering, we expect the number of patent and other intellectual property claims against us to grow. For example, on February 27, 2012, we received a letter from Yahoo! Inc. that alleged that a number of our products infringe the claims of 13 of Yahoo's patents. We are still in the process of investigating the allegations contained in the letter. To date, Yahoo has not commenced any legal action against us, but it may do so in the future.

Here's the relevant excerpt from today's IPO filing update:

From time to time, we receive notice letters from patent holders alleging that certain of our products and services infringe their patent rights. Some of these have resulted in litigation against us. For example, on March 12, 2012, Yahoo filed a lawsuit against us in the U.S. District Court for the Northern District of California that alleges that a number of our products infringe the claims of ten of Yahoo’s patents that Yahoo claims relate to "advertising," "social networking," "privacy," "customization," and "messaging." Yahoo is seeking unspecified damages, a damage multiplier for alleged willful infringement, and an injunction. We have not yet filed an answer or asserted any counterclaims with respect to this complaint. We intend to vigorously defend this lawsuit. This litigation is still in its early stages and the final outcome, including our liability, if any, with respect to these claims, is uncertain. If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition, or results of operations.

Interestingly, Mitel isn't mentioned at all in today's update. Mitel sued Facebook over two patents soon after Yahoo filed its lawsuit. In the meantime, Facebook has been bulking its patent portfolio: by my last count, the company has 812 patents. This includes 750 patents purchased from IBM, which Facebook also curiously left out from its amendment today (despite confirming to me that it did acquire patents from IBM).

As for the Ceglia lawsuit, here's the tidbit that was added:

On March 26, 2012, we filed a motion to dismiss Mr. Ceglia's complaint and a motion for judgment on the pleadings. We continue to believe that Mr. Ceglia is attempting to perpetrate a fraud on the court and we intend to continue to defend the case vigorously.

Last but not least, here is the relevant document filed today with the SEC you may want to check out for more information: Amendment No. 3 to Form S-1 REGISTRATION STATEMENT.

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