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Here’s a must-read analysis of the LOCM patent by Marty Himmelstein, formerly from Vicinity.

Marty also wrote to me privately:

Hi Sramana - I read your post on local.com today. As I tried to make the case in my post, the Local.com patent is fatally flawed. First, the copious prior art makes the patent irrelevant. I just don’t see how the patent could possibly survive that hurdle. Yahoo! has had a geographic search capability on their site since before Google. So, as I point out in my post, Google, Yahoo, and Microsoft have nothing to gain by acquiring Local.com. I don’t think there is much room for Local.com to maneuver here: that the prior art pertains directly to Local.com’s patent is obvious; it is plentiful, and it is better. I don’t think the patent should have been granted in the first place.

Google, by buying Local.com, wouldn’t be blocking anybody out of this multi-billion dollar market, because there are other doors that actually work. It reminds me of the scene in Blazing Saddles, where to slow their pursuers down, the good-guys put a toll-booth in the middle of the desert. And the bandits, none too bright, queue up in line. It won’t work this way.

Best, Marty Himmelstein

I also asked a very experienced lawyer, who won a massive patent suit against Microsoft for a rather simplistic invention for which his client had a patent. His response is as follows:

Before your email I had not heard of this company or its patent. I’ve done a little research and it appears to be another situation where a small company has gotten a software related patent and lots of bloggers are screaming about the patent system being broken etc; and others claiming it is invalid because of a lot of prior art. In my opinion there are not too many patent cases these days where weak patents are asserted successfully. If the patent is truly a weak one, it usually does not survive litigation.

I guess Local.com will sit around for a while waiting to be acquired by Google, Yahoo, etc. Those companies will do their due diligence, consult patent lawyers and try to gauge whether the patent is defensible. If the answer is no, and Marty says, that the answer will be no, there would be no acquisition offer.

Now, what all this tells me is that while LOCM’s patent has created the hue and cry, it may be worth looking in the prior (and later) art to see what patents in the local search arena do have merit and are defensible. If Google and Yahoo are looking at Intellectual Property and litigation as a strategy, then that, perhaps, would be a worthwhile exercise to orchestrate.

As for the LOCM stock, it has enjoyed a nice speculative run. I will stop at this: playing with this company as an investment is an unbelievably risky thing to do.

Source: More on the Local.com Patent Situation