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Source link: http://archive.mises.org/14908/facebook-and-its-rivals/

Facebook and Its Rivals

December 6, 2010 by

I enjoyed the interview with Mark Zuckerberg last night on 60 Minutes, and especially his dismissive comments toward the Winklevoss Twins and their ridiculous IP suit against Facebook that extracted $64 million from the company. I’ve written about the movie Social Network as a case study of how preposterous it is to claim that parallel invention amounts to an act of thievery.

Sad to say, however, Facebook itself has used IP litigation as a method of shoring up its own market share and crushing potential rivals. It went after a German site. It targeted Teachbook. It hammered a parody site called Lamebook and a porn site too. Innumerable sites could be the subject of IP litigation, including Goodreads and Academia.edu. Such legal action is a threat to the learning and emulative process that free markets inspire. It is a way of short-circuiting the competitive process, giving Facebook an unfair advantage over its rivals, using the state has a weapon.

Facebook might must say that this is merely an eye-for-an-eye form of defensive litigation. After all, some washed up dot com is suing Facebook for IP infringement and some company no one has ever heard of claims that it invented the news feed and wants it back.

How about we just stop the madness and try the free market for a change?


Country Thinker December 6, 2010 at 11:52 am

As an attorney I dealt with numerous junk IP suits, as well as other types of claims. Because of our permissive discovery rules, any claim, counterclaim, or cross-claim can very quickly become extremely expensive. In my experience, most commercial suits are for leverage and business advantage. Sad to say, but our legal system isn’t functioning properly.

A specific IP claim I saw several times was the use of patent infringement claims to disrupt the contracts of others. I had a client who secured a contract with a “big box” store, so a competitor filed a patent infringement suit. Because the big box store can be held liable if the infringement claim succeded, after a few months of discovery the chain dropped its contract with my client (it had a right to do so under the terms of the contract). Unsurprisingly the suit disappeared shortly after the contract.

iamse7en December 6, 2010 at 12:18 pm

Hate the sin, not the sinner.

I don’t blame Facebook for using whatever tools are out there to protect themselves. It’s a shame we don’t have a free market – but it’s extremely competitive out there, and Facebook would be silly not to use IP law (or any other law/government coercion) to their advantage. This is mostly a problem of government being too big, not Facebook using big government.

Stephan Kinsella December 6, 2010 at 6:00 pm

I don’t blame them either but I really don’t think they need to do this to be successful and flourish. Don’t be evil! (But don’t “boycott” FB either… :)

J. Murray December 7, 2010 at 7:18 am

There are better reasons to boycott Facebook.

slim934 December 6, 2010 at 11:20 pm

That is true to an extent. On the other hand I seriously doubt the legal team at facebook would agree. I imagine if there were a serious possibility that IP could go by the wayside that the legal department for facebook would go absolutely batshit nuts. They would claim their brand was being “diluted” (whatever the hell that means) and cry bloody murder if anything were to hur their supposedly beneficial monopoly.

I’m sure they are more than happy to have the ability to stifle and pretenders to their throne of King of Social Networking. It is true that the primary problem is government being too big, but I do not see facebook doing squat to help make it any smaller. They seem to be more than happy to be complicit in the whole schtick.

Ball December 6, 2010 at 6:05 pm

Hopefully, Dispora will wipe the floor with Facebook.


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