Yahoo filed intellectual property lawsuit against Facebook

Yahoo has decided to file an intellectual property lawsuit against Facebook claiming that the social network has infringed 10 of its patents including systems and methods for advertising on the web.

Facebook denies the allegation.

The move comes ahead of Facebook’s planned flotation later this year.

Patent litigation has become common between the smartphone makers, but this marks a new front in the battles between the tech giants.

A statement from Yahoo suggested the web portal believed it has a strong case.

“Yahoo’s patents relate to cutting edge innovations in online products, including in messaging, news feed generation, social commenting, advertising display, preventing click fraud and privacy controls,” Yahoo suit said.

“Facebook’s entire social network model, which allows users to create profiles and connect with, among other things, persons and businesses, is based on Yahoo’s patented social networking technology.”

Facebook signaled that it believed that Yahoo had not tried hard to settle the matter without involving the courts. It described Yahoo’s action as “puzzling”.

“We’re disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation,” it added.

The case has echoes of Yahoo’s decision to sue Google ahead of its flotation in 2004. That dispute centred over patents that Yahoo had acquired the previous year as part of its takeover of pay-per-position specialist Overture.

Google ultimately settled the case by issuing 2.7 million shares to its rival.

“It’s reasonable that Yahoo would want to try this tactic again as it worked in the past,” said BGC Partner’s New York-based technology analyst Colin Gillis.

“But there’s an air of desperation about this – it’s unlikely that they will get easy money from Facebook. This isn’t going to derail the IPO.”

Yahoo recently overhauled its board appointing Scott Thompson as its chief executive in January. The former Paypal executive replaced Carol Bartz who had been ousted in September.

Yahoo’s co-founder, Jerry Yang, also resigned from the board in January. The firm’s chairman and three other board members announced their decision to step down shortly afterwards.

The Wall Street Journal had reported that many Yahoo employees expected fresh job cuts following consecutive quarters of revenue declines.

Scott Thompson’s decision to sue may secure fresh funds or other assets if the courts rule in his favor.

“This is particularly interesting as it is one of the first patent cases concerning social media,” said Andrea Matwyshyn, assistant professor of legal studies at the Wharton School, University of Pennsylvania.

“The patentability of computer code is uncertain and recently several groups such as the Electronic Frontier Foundation and the Computer and Communications Industry Association have asked the US Supreme Court to examine the state of the law and accept a case to clarify when computer code can be protected through patent.

“This may be a case that advances past the district court and at least reaches the appellate court level – one notch below the Supreme Court – if the two parties do not settle first.”

The latest suit was filed in the US district court for the northern district of California.