13/03/2012 04:36 GMT | Updated 12/05/2012 06:12 BST

Yahoo Sues Facebook

Yahoo is suing Facebook over patents, weeks before the social-networking heavyweight is due to cash in with its initial public offering of stock.

Yahoo said in a US court filing that Facebook had infringed 10 of its patents covering advertising, privacy controls and social networking.

Yahoo had threatened to sue Facebook last month, insisting that the social network license its patents. Facebook vowed to defend itself vigorously against what it called "puzzling actions" by Yahoo.

"We're disappointed that Yahoo, a long-time business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation," Facebook said.

Yahoo ties a lot of its online services to Facebook, which has helped it attract users. As with many patent suits, this one will probably be resolved in a settlement or licensing deal. That said, the patent claims could cast a spotlight on Facebook's vulnerabilities as the company tries to complete an IPO (Initial Public Offering) this spring.

At the end of 2011, Facebook had just 56 US patents, a relatively small number compared with other big tech companies. Yahoo owns more than 1,000 patents.

That trove of patents may come in handy for Yahoo, which has seen its revenue fall steadily over the past three years. But it could also cast the company as desperate, trying to extract money from soon-to-be-public Facebook.

Yahoo made hundreds of millions from a patent settlement that it reached with Google just before the internet search leader went public in 2004. Facebook's IPO is expected to dwarf Google's, valuing the Menlo Park, California-based social network at as much as £64 billion.

Yahoo defended its lawsuit, saying it has invested "substantial resources in research and development" over the years leading to technology patents that other companies have licensed. Its lawsuit says that without Yahoo's innovations, Facebook and other websites would not enjoy "repeat visitors or substantial advertising revenue."

CORRECTION: An earlier version of this PA article stated that an IPO was an Intellectual Property Office, which has now been corrected.