UPDATED 14:27 EDT / APRIL 21 2017

APPS

Snap shells out $7.7 million for a single patent to stave off future lawsuits

Taking a page from the book of its fellow technology giants, Snap Inc. is stocking up on intellectual property to prepare against potential litigation.

Anonymous sources told TechCrunch on Thursday that the messaging giant has paid a hefty $7.7 million to acquire a much sought-after patent from an Israeli firm called Mobli Ltd. It covers a method of implementing geofilters, photo overlays distributed to users in a specific region, which Snap uses to attract advertisers. The company sells a service that lets brands create custom filters to promote events, stores and other local attractions through its app.

Geofilters constitute one of the four main offerings on which Snap relies to generate revenue. Mobli, in turn, had originally implemented the feature as part of its Instagram-like image sharing service. In an email sent to shareholders, the latter firm noted that the acquisition is believed to mark “by far the highest amount paid for a single patent in Israel.”

For Snap, however, it may be a small price to pay on the long run. Had the company not acquired the patent, another buyer would’ve likely jumped on the opportunity, which in turn could have exposed it to the risk of litigation. And as Apple Inc.’s recent billion-dollar lawsuit against Qualcomm Inc. demonstrates, an intellectual proprietary dispute could cost Snap much more than $7.7 million.

The deal is especially significant since Mobli reportedly approached Facebook Inc. during its search for a buyer. Obtaining the patent could have given the social networking giant a valuable legal asset amid its ongoing efforts to replicate Snap’s core features. Of course, it may still implement some form of geofilters using a different method than what the filing covers, but this week’s deal should make the task somewhat more difficult.

The purchase marks the latest twist in Silicon Valley’s complex relationship with the patent system. When they’re not hurling lawsuits at one another, members of the tech industry are actively collaborating to fight against so-called patent trolls that make their living from intellectual property litigation. At the center of the effort is a license-sharing initiative called the LOT Network that focuses on making it more difficult for such entities to operate.

Image: Snap

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