Facebook is violating at least 10 of Yahoo‘s patents covering processes for handling Internet ads, the struggling search and Web content company told a federal court in San Jose today. For example, Yahoo says that its patents cover methods and systems for customizing pages based on a user’s preferences, placing ads on a page based on the click through rate, managing the display of a user’s social network information without violating his or her privacy, and enabling an instant message user to exchange messages with an email user. “These technologies are the foundation of our business that engages over 700 million monthly unique visitors and represent the spirit of innovation upon which Yahoo! is built,” the company says. “Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court. We are confident that we will prevail.” Facebook says it’s “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.” The company adds that it “learned of Yahoo’s decision simultaneously with the media” and vows to defend itself “vigorously.”
The suit comes as both companies are preparing to make potentially profound changes. The suit could complicate Facebook’s plans for a $5B IPO, which it told the SEC last month it intends to file. And Yahoo’s new CEO Scott Thompson is still trying to determine a course for the company. He’s said to be weighing a massive layoff. The company also is fighting a campaign by hedge fund Third Point to elect four dissident directors to the board.