Yahoo has sued Facebook over 10 patents that include methods and systems for advertising on the web, opening the first major legal battle among big technology companies in social media.
The lawsuit, filed in a San Jose, Calif., federal court on Monday, marks a major escalation of patent litigation that has already swept up the smartphone and tablet sectors and high-tech stalwarts such as Apple Inc, Microsoft Corp and Motorola Mobility Holdings Inc.
Yahoo's patent lawsuit follows Facebook's announcement of plans for an initial public offering that could value the company at about $100 billion.
Facebook spokesman Jonathan Thaw said Facebook learned of the lawsuit through the media.
"We're disappointed that Yahoo, a longtime business partner of Face-book and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation," he said.
In an emailed statement, Yahoo said it is confident it will prevail.
"Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court," the company said in a statement.
Yahoo, one of the web's pioneering companies, has seen its revenues de-cline in recent years at a time when rivals such as Facebook and Google have thrived. In January, Yahoo appointed former PayPal President Scott Thompson as its new chief executive, replacing Carol Bartz, who was fired in September.
Yahoo said late last month it was seeking licensing fees from Facebook over its patents and that other companies have already agreed to such licensing deals.
Colleen Chien, a professor at Santa Clara Law in Silicon Valley, said companies are usually more vulnerable to patent suits when they are in the IPO process.
"As a general proposition, when a company is about to go public, the last thing it needs is to get involved in a knock-down, drag out litigation fight," Chien said. "So that might make Facebook more willing to re-solve its differences with Yahoo."
Yahoo has used similar timing to its advantage in the past. Google agreed to issue shares to Yahoo nine days before Google went public in 2004 in exchange for a licence to Yahoo's patents. Google later took a $201-million non-cash charge related to the transaction.
In the lawsuit, Yahoo says Facebook was considered "one of the worst performing sites for advertising" prior to adapting Yahoo's ideas.
"Mr. Mark Zuckerberg, Facebook's founder and CEO, has conceded that the design of Facebook is not novel and is based on the ideas of others," the lawsuit said. Only two of the 10 patents at issue are directly related to social networking technology. Most focus on online advertising.
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