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Tuesday, March 13, 2012

Yahoo! Files Advertising Lawsuit Against Facebook

First appeared in Bloomberg News
Yahoo! Inc. accused Facebook Inc. in a federal court lawsuit of infringing patents related to Internet advertising and information sharing.

Lawyers for Yahoo, in a complaint filed today in federal court in San Jose, California, seek a court order barring Facebook from infringing 10 patents and awarding it triple damages. The patents cover website functions such as advertising, privacy protection, information customization, social networking and messaging, according to the complaint.

Yahoo, owner of the most popular U.S. Internet portal, said in February that Facebook must license its technology, pointing out that other Web companies have licensed its intellectual property. Yahoo is looking for ways to revive growth after losing ground to Facebook in the display advertising market and trailing Google Inc. in Web searches.

“For much of the technology upon which Facebook is based, Yahoo! got there first,” according to the complaint. “Facebook’s entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo!’s patented social networking technology,” Yahoo said in the complaint.

Yahoo lost its No. 1 spot to Menlo Park, California-based Facebook last year in the U.S. market for display advertising, which includes video and graphically based marketing messages, according to EMarketer Inc. In January, Yahoo, based in Sunnyvale, California, reported fourth-quarter revenue of $1.17 billion, excluding sales passed on to partner sites. That fell short of analysts’ estimates of $1.19 billion.

‘Longtime’ Partner

“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,” Facebook said in a statement.

“Once again, we learned of Yahoo’s decision simultaneously with the media,” Facebook said. “We will defend ourselves vigorously against these puzzling actions.”

Yahoo said in an e-mailed statement that its patented technologies attract more than 700 million unique visitors each month.

“Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court,” Yahoo said in the statement. “We are confident that we will prevail.”

The case is Yahoo! Inc. v. Facebook, 12-cv-01212, U.S. District Court, Northern District of California (San Jose).