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Yahoo files patent lawsuit against Facebook

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Yahoo!
Yahoo is to file legal papers against Facebook over claims that Mark Zuckerberg's firm has infringed its patents covering advertising, privacy controls and social networking.

The court filing, which follows a threat issued last month, claims that Facebook infringes ten of the patents owned by Yahoo, a one-time internet powerhouse that has more recently struggled to compete with online rivals including Facebook.

Yahoo has demanded that Facebook should licence the patents, but Facebook has said that it will defend itself from the "puzzling actions" of Yahoo.

"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," the company said in a statement. "We will defend ourselves vigorously against these puzzling actions."

Patent battles are a common feature in the wider technology industry, most recently seen in abundance among smartphone makers, but Facebook and the social networking market has so far remained relatively immune.

To protect its technology, Facebook has filed more than 410 applications at the US patents office over the past 18 months, according to asset management firm M. CAM, although it is understood to own only around 56 patents.

In contrast, Yahoo has filed more than 1,000 patents since it was founded in March 1996, covering a wide variety of aspects across its online operation.

Yahoo is thought to view patents as a viable strategic way to raise funds and also hinder its rivals, after the firm saw a steady decline in its online advertising revenues, leading to takeover speculation.

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But the timing of the law suit, coming just months ahead of Facebook's long-awaited initial public offering, is being viewed as Yahoo putting itself in a strong bargaining position to request a stake in the social network.

The firm previously brought a similar patent claim against Google in the run-up to the US firm's initial public offering in 2004. After Yahoo acquired search advertising firm Overture, it was able to force Google to hand over 2.7m shares, which were worth $230m (£150m) when the company went public.

In a statement, Yahoo defended the Facebook lawsuit, saying: "Yahoo has invested substantial resources in research and development through the years, which has resulted in numerous patented inventions of technology that other companies have licensed.

"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.

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

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