In what is either the boldest gamble of its history or the most boneheaded, Yahoo has filed a massive patent infringement lawsuit against Facebook.

The attack by the Silicon Valley Internet icon against perhaps the most powerful consumer social networking site today — also based in tech’s heartland and also an important partner of Yahoo — is sure to be a controversial one, pitting Yahoo against a company that has surpassed it handily in recent years in regards to popularity among consumers.

“Facebook’s entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo’s patented social networking technology,” Yahoo’s lawsuit reads, in part.

That includes, Yahoo alleges, Facebook’s popular News Feed, advertising methods, privacy settings and more. The company adds that Facebook has been “free riding” on Yahoo’s intellectual property and that royalty payments alone will not suffice.

So what does Yahoo want for this alleged free ride? Triple damages and to enjoin Facebook from operating by using said patents.

The 19-page lawsuit over 10 patents — related to advertising, privacy, customization, messaging and social networking — comes as Yahoo is seeking to right itself under new CEO Scott Thompson.

Multiple sources said he is primarily driving this new aggressiveness from Yahoo.

Since Yahoo told the New York Times that it was considering such a move last week, the issue has been widely debated within the company, with many top techies there opposed to it, due to the company’s longstanding ethos of using patents for defense rather than offense.

Thus, the decision to move was closely held, sources said, with only Thompson and legal chief Michael Callahan largely working on it.

Still, patent lawsuits have become ever more prevalent among tech companies, as they seek to battle for advantage in a rapidly changing competitive landscape. Apple, Google, Microsoft and others are involved in several legal actions, although they are largely related to mobile technology.

Yahoo’s lawsuit is the most prominent in the social networking arena, a sector that has seen a huge explosion of late. Its timing could not be worse for Facebook, since it is in a quiet period for its upcoming IPO, which is expected to value the company at close to $100 billion.

Yahoo has done this kind of thing before, of course, having wrangled with Google until right before it went public in 2004 over search patents from its Overture acquisition. The pair settled 10 days before the Google IPO, with Yahoo getting several million more shares of that stock.

Yahoo is shaking Facebook down for much more here and with much higher stakes for both companies. If successful, Yahoo could seriously damage Facebook’s initial public offering; if not, Yahoo will cement its growing reputation as a company with nothing to lose, whose value is built not on its current business, but on non-operating assets.

More importantly, at least initially, the move did nothing to boost Yahoo’s moribund shares — the stock was down about one percent to $14.49 in after-hours trading.

More to come, but here is the entire document below. The lawsuit has been filed in San Jose, Calif., federal court.

Lastly, the official PR back-and-forth:

Said Yahoo, in its statement:

“Yahoo! has invested substantial resources in research and development through the years, which has resulted in numerous patented inventions of technology that other companies have licensed. These technologies are the foundation of our business that engages over 700 million monthly unique visitors and represent the spirit of innovation upon which Yahoo! is built. Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court. We are confident that we will prevail.”

Facebook, obviously, disagrees, and also threw in a jab about the lack of discussions over the issue between the pair:

“We’re disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation. Once again, we learned of Yahoo’s decision simultaneously with the media. We will defend ourselves vigorously against these puzzling actions.”

I’ll admit to also being puzzled about the strategery here, but I am sure there will be much more to come.

Until then, read on:

Complaint

And here is what I wrote last week on the subject:

Apparently, Yahoo’s new motto: If you can’t beat ‘em — and it can’t — sue ‘em.

That would be Yahoo — the perpetual 98-pound weakling of the Internet these days — threatening powerful Facebook, which had cleanly bested it by attracting hordes of users with a plethora of popular products and services.

Yahoo has already lost its audience to Facebook, which was most recently followed by its frittering away a commanding lead in display advertising, too.

That would also be the Yahoo whose most recent success in improving its increasingly tenuous connections with customers was, in fact, by deeply integrating Facebook’s social hooks into its Web properties.

That would be the Yahoo which has failed time and again to innovate its own offerings so drastically over the years that it has now apparently decided that its first and best strategic move under Thompson’s rule is a shakedown.

Such a cynical move on rights Yahoo has long held seems more a play for the cheap seats of Wall Street, given that the company needs to look like it is doing everything it can to turn things around right now as it faces a proxy challenge.

First, it ended difficult talks with its Asian partners, Alibaba Group and SoftBank, over selling back lucrative stakes there.

Now, according to sources, Yahoo’s Thompson has actually been trying to make very nice with activist shareholder Daniel Loeb of Third Point — on-the-down-low chitchats that might have played a part of this latest unusual move.

At least Kodak had a good excuse. The once iconic camera company had recently been trying to take advantage of its trove of patents as a way to stave off declaring bankruptcy.

That didn’t work for Kodak, and it will also not work for Yahoo, whose only real option is to try to innovate its way out of the mess it has landed itself in.

You know, with good ideas.

Instead, the company’s leadership has opted for a road that could rain down trouble and paint Yahoo as a company bereft of talent to win any other way.

And while a range of intellectual property lawsuits have broken out all over the digital sector, involving Apple, Microsoft, Google and many others, such a strategy for Yahoo could be dangerous if it fails in its legal effort to take advantage of its 1,000-plus patents, including those related to search and advertising.

Others — including such tech luminaries as LinkedIn’s Reid Hoffman, who co-owns the seminal Six Degrees patent for constructing a networking database and system — hold a number of critical social networking patents, too, so who knows where this thing will go.

Nonetheless, Yahoo has decided to emulate those companies with one of the few valuable assets it might have, waging its little war, right as Facebook is in the midst of its initial public offering period.

Yahoo has done this before, of course, having wrangled with Google until right before it went public in 2004 over search patents from its Overture acquisition. The pair settled 10 days before the Google IPO, with Yahoo getting several million more shares of that stock (which it then, of course, sold too soon).

That certainly could happen here, with Yahoo managing to grab a chunk of Facebook’s pre-IPO stock.
That would mean that Yahoo’s most valuable asset would be those shares, as well as its stake in Asian companies it bought a while back for a bargain and now makes up a bulk of the company’s valuation.

As to Yahoo’s core business — investors consider it almost entirely worthless.

And let’s not forget: Facebook could also sue right back, which it very well might do. Or, perhaps, cut off agreeable ties that have aided Yahoo in recent years.

In other words, in poking Facebook, Yahoo might now learn what it is really like to be de-friended.

According to 2009′s safely-looking-ahead-at-the-year-to-come articles, 2010 was to be “a year of social media convergence.” It was to be a year in which The Cloud “became part of the everyday lexicon of business” and “a year of invention and innovation.” 2010 was to be not just “the year of the tablet,” but also “the year of the smartphone,” “the year of the tweet” and “the year of location.” Above all, 2010 was to be “a year of significant developments” and generally “a busy year for technology.”

And I suppose it was that. But for me, 2010 was a year like any of year–one not to be taken too seriously. Because if you can’t laugh at Eric Schmidt telling critics of Google Street View to “just move,” Apple telling people that their grip–not the iPhone 4′s antenna–is faulty, or Oracle’s samurai CEO Larry Ellison in a kimono, then, really, what’s the point?

It may be true, as my colleague Peter Kafka noted earlier this week, that there’s little point in pretending we know what’s going to happen in the year ahead, but the year about to pass remains good for a laugh.

It’s a geek’s dream: Lots of cool gadgets and wacky inventions wielded by nerdy villains.

That would be “Despicable Me,” an animated movie opening this week and starring Steve Carrell as Gru.

Enjoy the film’s trailer:

But there’s one more company at the end of that oblique line of ownership: Intellectual Ventures, an “invention capital firm” or patent troll, depending on your views on innovation and intellectual property.

Over the past few days, multiple sources with knowledge of the patent have told me it is owned by Intellectual Ventures. And now Intellectual Ventures has confirmed this. The company operates Memscom LLC, which operates Durham Logistics LLC, and through Durham, owns patent #7,679,604.

According to intellectual property consulting firm Avancept, Intellectual Ventures is linked to some 1,110 shell companies and affiliated entities. Evidently, Memscom and Durham Logistics are two of them.

Patent #7,679,604 is just one of many that Intellectual Ventures owns through that pair of LLCs. The U.S. Patent and Trade Office lists 29 patents and patent applications assigned to Durham Logistics (see list below; click to enlarge), all of which were first developed by ArrayComm, the wireless communications software company founded by cellphone pioneer Marty Cooper.

Among them, #6,834,249, a motion-control patent nearly identical to #7,679,604, that was granted in 2004 after a 2001 application and would seem to predate many of the motion-sensing smartphones currently on the market.

What does Intellectual Ventures intend to do with these patents? Well, that’s obvious, isn’t it? Said an Intellectual Ventures spokesperson: “We don’t currently have specific plans to announce regarding any asset(s) in particular, but we are actively talking with customers about licensing our invention portfolio on fair and reasonable terms.”

COMPLETE COVERAGE:

• New Motion Control Patent Could Shake Up Smartphone Industry
• Smartphone Motion Patent’s Authors Are Google, Apple Engineers
• Confirmed: Intellectual Ventures Owns Smartphone Motion-Control Patent

Here’s a potentially noteworthy development in the patent litigation-riddled mobile device market. Last week, the United States Patent and Trademark Office issued a very broad patent on motion-based smartphone control, one that could have significant implications for the industry.

The patent is #7,679,604, “Method and apparatus for controlling a computer system,” and it describes motion control as a means of interacting with smartphones and the like.

The invention, the patent’s authors explain, “facilitates an intuitive motion control of the application by physically manipulating the electronic device…it enables a user to intuitively control the state and/or displayed content of a computing device without the conventional need of pressing button(s), or manipulating a trackpad, trackball, etc. In this regard, the motion control agent represents a new paradigm in user control of computing systems.”

Sounds quite a bit like the motion control you find today in Apple’s (AAPL) iPhone, doesn’t it? Or in Palm’s (PALM) Pre. Or Google’s (GOOG) Nexus One (ironically, one of the inventors to which the patent is credited is a Google engineer). Or Motorola’s (MOT) Droid. Or Nokia’s (NOK) 5800.

Which is interesting, because none of those companies owns patent #7,679,604. It belongs to Durham Logistics, a Las Vegas limited liability company about which I can find little information.

When I contacted the Nevada Secretary of State’s office about Durham Logistics, it referred me to CSC Services of Nevada, the company that did the paperwork on Durham’s LLC status. CSC Services Of Nevada refused to provide any information. Ygomi, the company that now owns ArrayComm, the software outfit to which the patent was first assigned, doesn’t know much about it either. The law firm listed on Durham Logistics’ patent assignment hasn’t responded to my inquiries. Nor has ArrayComm founder Marty Cooper, who might be able to shed a bit of light on the transfer of the patent to Durham.

Finally, the lead inventor to which the patent is credited declined to comment on the record.

Is Durham Logistics a legitimate company? Is it an IP holding company for another entity? A patent troll? Who knows? But, it’s sitting on this patent.

Now, I’m no expert on intellectual property, but it’s worrisome to me that a patent as broad as this exists at all, let alone that it’s in the hands of some mysterious Vegas LLC we know nothing about. After all, patent #7,679,604 seems to apply not just to any smartphone with an accelerometer, but to any device that uses any method of measuring motion as a means of control. As one patent attorney told me, “It’s obscenely broad.” And it’s old enough to predate many of the motion-sensing smartphones currently on the market.

Though issued just last week, the patent was filed in July 2006. And it was preceded by a nearly identical patent granted in 2004 after a 2001 application.

The first smartphones to feature built-in accelerometers–among them, the Sony Ericsson W910i and the iPhone–didn’t begin arriving at market until 2007-2008, right around the time the companies building them began filing motion-interface patents of their own.

For example, at least two major motion-related Apple patent applications–“Movement-based interfaces for personal media device” and “Varying User Interface Element Based on Movement”–weren’t filed until October 2007.

Which means that Durham Logistics could be sitting on a powder keg of a patent, one that, if allowed to stand, extends to a technology that has been widely built into today’s smartphones–the one sitting on my desk and perhaps yours as well.

Question is, will the company assert it? And if it does, is there prior art that would render its claims anticipated?

COMPLETE COVERAGE:

• New Motion Control Patent Could Shake Up Smartphone Industry
• Smartphone Motion Patent’s Authors Are Google, Apple Engineers
• Confirmed: Intellectual Ventures Owns Smartphone Motion-Control Patent

US7679604

“We’ve been pushing the state-of-the-art in every facet of design….We’ve been innovating like crazy for the last few years on this and we’ve filed for over 200 patents for all of the inventions in iPhone. And we intend to protect them.”

– Apple CEO Steve Jobs, Jan. 9, 2007

Asked for his thoughts on iPhone rivals during a January 2009 earnings call, Apple COO Tim Cook said the company would not stand for having its intellectual property ripped off.

“We are watching the landscape,” Cook said. “We like competition, as long as they don’t rip off our IP, and if they do, we’re going to go after anybody that does….We think competition is good; it makes it us all better. But we’re ready to suit up and go against anyone.”

Well, looks like Apple (AAPL) is suiting up, and against a big opponent. This morning, the iPhone maker filed suit against HTC, a Taiwanese handset manufacturer that makes a number of Android smartphones, including the operating system’s marquee device, Google’s Nexus One (Read the suits in their entirety here.)

In a lawsuit filed concurrently with the U.S. International Trade Commission and U.S. District Court in Delaware, Apple alleges that HTC infringed some 20 patents related to the iPhone’s graphical user interface, underlying architecture and hardware. The company is asking for a permanent injunction barring HTC from importing or selling infringing phones in the U.S., along with triple damages and maximum interest.

“We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it,” Apple CEO Steve Jobs said in a press release announcing the action. “We think competition is healthy, but competitors should create their own original technology, not steal ours.”

HTC appears to have been totally blindsided by the suit. As of this writing, it hasn’t even been served.

“We only learned of Apple’s actions based on Apple’s press release,” the company said in a statement. “We have not been served any papers yet so we are in no position to comment on the claims. We respect and value patent rights but we are committed to defending our own innovations. We have been innovating and patenting our own technology for 13 years.”

It’s not yet clear whether Google (GOOG) is implicated here. But it certainly seems possible. After all, HTC manufactures a number of Android devices, and while Google insisted at the Nexus One launch that it didn’t design the device, the search giant clearly played a role in its development.

Of course, it could be that Apple is suing HTC because it can’t, for some reason, sue Google. More details to follow once I’ve read through the suits.

Further Reading:

• Apple Sues HTC [Complete Court Filings]
• Why HTC, Apple? And Why Now?
• Apple vs. Google: Game On

But–as many readers have requested–they will all be available in their entirety in this column.

Here is a video of an interview Walt Mossberg did with Nathan Myhrvold, founder and CEO of Intellectual Ventures.

In it, Mossberg wrangles with the former Microsoft (MSFT) CTO and research guru over his controversial company, which is assembling a large body of patents and inventions.

The Wall Street Journal wrote a piece earlier this week about Myhrvold’s efforts, discussing how he is “using that clout to press tech giants to sign some of the costliest patent-licensing deals ever negotiated.”

The video of the interview is in three parts.

In this third part, Myhrvold takes questions from the audience, including about whether Intellectual Ventures is making a patent land grab, putting resources behind inventions to make actual products, patent abuse and making research into a profit center.

But–as many readers have requested–they will all be available in their entirety in this column.

Here is a video of an interview Walt Mossberg did with Nathan Myhrvold, Founder and CEO of Intellectual Ventures.

In it, Mossberg wrangles with the former Microsoft (MSFT) CTO and research guru over his controversial company, which is assembling a large body of patents and inventions.

The Wall Street Journal wrote a piece yesterday about Myhrvold’s efforts (and did not use our D6 video covering the exact same topic, but we happily link to the Journal’s article anyway!), discussing how Myhrvold is “using that clout to press tech giants to sign some of the costliest patent-licensing deals ever negotiated.”

The video of the interview is in three parts.

In this second part, Myhrvold talks about legendary inventor Thomas Edison and the history of patents and inventions, “invention capitalism,” the patenting of software and its abuse by tech giants, multi-touch technologies and where innovation will come from next.

But–as many readers have requested–they will all be available in their entirety in this column.

Here is a video of an interview Walt Mossberg did with Nathan Myhrvold, Founder and CEO of Intellectual Ventures.

In it, Mossberg wrangles with the former Microsoft (MSFT) CTO and research guru over his controversial company, which is assembling a large body of patents and inventions.

The Wall Street Journal wrote a piece today about Myhrvold’s efforts (and did not use our D6 video covering the exact same topic, but we happily link to the Journal’s article anyway!), discussing how Myhrvold is “using that clout to press tech giants to sign some of the costliest patent-licensing deals ever negotiated.”

The video of the interview is in three parts.

In this first part, Myhrvold talks about exactly what Intellectual Ventures is–essentially, supporting inventors before they invent–discusses the importance of patience in the inventing business, gives examples of inventions in arenas like energy and defines what a “patent troll” is (not him, he insists).