WSJ.com - Friendster Patent on Linking Web Friends Could Hurt Rivals

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Friendster Inc., known for bringing people together, could wind up making enemies among its peers.

Last month, the Web company was awarded a patent related to searching for people online based on their relationships, and it expects another patent to come through soon.

Now, company executives are weighing their options, including whether to sue rivals. "We want to protect our intellectual property," says Kent Lindstrom, Friendster's president. "We're evaluating what we should do."

Patent controversies have become a familiar hazard on the Web as companies seek protection for emulating real-world concepts in virtual environments. For Friendster, patents could be an important new asset as it tries to reinvent itself. Many Web users have ditched it in favor of trendier rivals like Facebook Inc. and News Corp.'s MySpace. In June, the number of monthly U.S. visitors at MySpace tripled from a year earlier to 45.8 million, and visitors at Facebook doubled to 7.9 million, according to Nielsen/NetRatings, which tracks Web traffic. The number of visitors to Friendster is still under one million.

Back in 2002, Friendster pioneered social networking via Web sites. Founded by entrepreneur Jonathan Abrams, it struck a nerve among the young and Web savvy, who flocked to the site to track down old friends and meet new people.

Early on, while Friendster was grappling with competition and other issues, it filed about a dozen patent applications covering various aspects of social networking. The patent Friendster was granted last month covers "a method and apparatus for calculating, displaying and acting upon relationships in a social network" -- in short, acting as a hub to connect Web users with common acquaintances. "The attorneys we've talked to say the patent is very strong," Mr. Lindstrom says.

The company says it also received a "notice of allowance" from the U.S. Patent and Trademark Office this week indicating that the company is likely to soon be granted a patent that covers technology that lets users upload their own content, like photos, onto a friend's page.

Mr. Lindstrom says the company's lawyers are encouraging him to consider "taking people out from a litigation standpoint." But he says he is also weighing less extreme approaches, like asking for patent-licensing fees or not taking any legal action at all.

Friendster won't say which rivals it would potentially target, though MySpace and Facebook, as well as a spate of smaller upstarts, offer services similar to Friendster's. A MySpace spokesman declined to comment, as did a spokeswoman for Facebook.

As with other high-profile Web patents -- like Amazon.com's patent on "one-click" shopping -- Friendster's patents are likely to be closely studied. One issue is whether they cover fundamental inventions or features that competitors could easily avoid using.

"The claims seem pretty broad, like they might cover a lot of other social-networking situations," says Bill Heinze, an intellectual-property attorney at Thomas, Kayden, Horstemeyer & Risley LLP in Atlanta, Ga.

If others can show that their activities don't infringe on Friendster's claims or can point to similar technology that precedes Friendster, they could escape litigation, Mr. Heinze says. Indeed, New York-based Six Degrees Inc., a now-defunct Web company, was granted a patent for a form of database that could relate to social networking.

Some are skeptical of Friendster's claims. "People have been stalking each other on the Internet for years -- from Google vanity searches to lurking on somebody's blog reading what your ex is doing these days," says Jason Schultz, an attorney at the Electronic Frontier Foundation.

The San Francisco nonprofit is running a "patent-busting" campaign to combat patents that it sees as illegitimate. "I don't think they've really come up with an innovation for finding people you know," he says.

But Mr. Lindstrom argues that Friendster's founder, Mr. Abrams, who left the company and is preparing to launch a startup called Socializr, invented something original. "Two and a half years ago, you'd never heard of a social network," he says. "Jonathan Abrams did something, and suddenly this new thing existed. Maybe it doesn't seem new now, but it certainly did at the time."

Meanwhile, four years after its founding, Friendster is struggling to make itself over. "We went through a lot of ups and downs," Mr. Lindstrom says. "Strategically we weren't sure where we were going."

Mr. Lindstrom describes the company's growth problems as two-fold: People got fed up with performance issues, like pages taking several seconds to load, and the company made some missteps as it tried to add splashy features like a Web phone service. Users wanted some simpler improvements, such as being able to keep track of changes to their friends' pages.

After News Corp. acquired MySpace last year, Friendster tried to put itself up for sale. Mr. Lindstrom calls that effort "poorly timed," and nothing came of it.

Earlier this year, the company's investors infused it with $3.1 million in additional funding and put pressure on executives to improve performance, Mr. Lindstrom says. Now, the company is overhauling its management team and has modified its strategy.

Its new tack: Sell itself as a grown-up service, targeting adults in their 20s and 30s rather than trying to compete for MySpace's teenage audience or Facebook's college-aged users.

To address performance issues, Friendster hired a former Siebel Systems Inc. executive and engineering whiz, Chander Sarna, as vice president of engineering. With his help, the company has worked to speed up the Web site. It has also redesigned its front page so that users can more easily keep track of changes to their friends' personal pages.



	July 27, 2006