Friendster's Patent Possibilities

Social-networking upstarts have stolen its lead, but the site now may have a potent legal weapon at its command may be losing some of its "friends" to upstart But the old-school social-networking site just got something that MySpace lacks: a patent on—you guessed it—social networking.

The patent, issued on June 27, refers to a "system, method, and apparatus for connecting users in an online computer system based on their relationships within social networks." While that's pretty general, it certainly covers the activities of the dozens of other social-networking Web sites that have sprung up since Friendster filed for the patent in June, 2003 (see, 12/12/05, "The MySpace Generation").

It's not yet clear how Friendster will use the patent, which names original founder Jonathan Abrahms as the inventor. Friendster President Kent Lindstrom says the company is in the process of determining whether the site will be able to charge licensing fees. "Any kind of businessperson would say, 'Hey, we're going to prosecute this to the full extent we can and get every penny we can out of it,' " says Lindstrom. "But we do work in a community of businesses and don't want to just cause trouble if there is no reason for it."

But trouble is waiting, should Friendster decide to wield the patent. "There is a legal presumption that the patent claims were properly issued over the earlier technology discussed in references that were considered by the Patent Office while the application was under examination," says intellectual-property attorney Bill Heinze of Thomas, Kayden, Horstemeyer & Risley. "It's very difficult for someone to convince a judge to go back and say the examiner is wrong."


  Other social-networking Web sites don't yet appear to be losing much sleep. Reid Hoffman, founder of business social-networking site, said in an e-mail, "Some of our folks have reviewed the claims, and think that it's fairly obvious that none of them apply to us…. So, in short, not worried." A MySpace spokesperson says the company isn't currently prepared to comment. founder Aaron Cohen says that patent protection could hold back innovation in the industry. "Social media today is similar to rock 'n' roll in the '60s," he says. "Every company riffs on each other. Patent-protection strategies are counter to the spirit of the user-generated revolution."

Friendster wasn't the first to file a social-networking patent., an early social-networking community that at its peak had about 3.5 million members, in 2001 was granted a patent for which it filed four years earlier. The patent went as part of the assets when sold to now-defunct media company Youthstream Media Networks. Hoffman, along with founder Marc Pincus, purchased that patent at an auction in 2003.

Meanwhile, Friendster filed for a dozen patents in mid-2003 at the urging of major venture capital backer Kleiner Perkins Caufield & Byers. A second patent is expected to be granted soon, says Lindstrom. This one will focus on the technologies involved when a user loads photos onto another user's page.


  Friendster has lost luster in recent years, earning a reputation for failing to keep up with the needs and desires of its users (see, 6/13/05, "Hey, Come to This Site Often?"). But in recent months, the site has picked up momentum as it continues to improve design and technology. Friendster counts 9 million to 10 million users, and it added 300,000 users last month. Says Lindstrom, "It's not MySpace, but it's a pretty sharp increase." (MySpace, owned by News Corp. (NWS), had 51 million unique users in May.)

Last October, Friendster put itself on the block, but by early winter, it hadn't found a buyer and was quickly losing capital. Kleiner Perkins pulled Friendster out of debt in February, giving the company the capital to pay its 25 employees and get back on track.

The company now plans to focus on post-college users, young urban adults looking to connect to people in new cities. The recently redesigned site gives attention to what users are doing, rather than inviting folks to surf profiles, and Friendster is bulking up on engineers to make the site more user-friendly. Says Lindstrom: "In the end, people will end up using Friendster because the design is good and it runs fast. So we've been focusing on responding to what users are asking for."

Maybe, but in a sector where popularity is viral and fleeting, and reputation is everything, Friendster may want to think twice about unfriendly acts toward rivals.

    Before it's here, it's on the Bloomberg Terminal.