Yahoo has sued Facebook over ten patents that include methods and systems for advertising on the web.
The lawsuit, filed in a California federal court, marks a major escalation of patent litigation that has already swept up the smartphone and tablet sectors and high-tech stalwarts such as Apple, Microsoft and Samsung.
Yahoo said late last month it was seeking licensing fees from Facebook over its patents and that other companies have already agreed to such licensing deals.
Yahoo's patent lawsuit follows Facebook's announcement of plans for an initial public offering that could value the company at about $100 billion.
Facebook spokesman Jonathan Thaw said Facebook learned of the lawsuit through the media.
If what Yahoo is saying is literally true, then it seems like a lot of companies would be liable
"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," he said.
In an emailed statement, Yahoo said it was confident it would prevail.
"Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court," the company said.
Yahoo has seen its revenues decline in recent years at a time when rivals such as Facebook and Google have thrived.
In January, Yahoo appointed former PayPal president Scott Thompson as its new chief executive, replacing Carol Bartz, who was fired in September.
Online advertising
In the lawsuit, Yahoo says Facebook was considered "one of the worst performing sites for advertising" prior to adapting Yahoo's ideas.
"Mark Zuckerberg, Facebook's founder and CEO, has conceded that the design of Facebook is not novel and is based on the ideas of others," the lawsuit said.
Only two of the ten patents at issue are directly related to social networking technology. Most focus on online advertising, including methods for preventing "click fraud," as well as privacy and technology for customising the information users see on a web page.
"If what Yahoo is saying is literally true, then it seems like a lot of companies would be liable," said Shubha Ghosh, a professor who specialises in intellectual property at The University of Wisconsin Law School. But, he added, much would depend on whether a judge defines the patents broadly or narrowly.
The lawsuit is a change for Yahoo because the company has never initiated offensive patent litigation against such a large publicly traded company.
A classic defence for companies targeted with patent claims is to threaten a countersuit using its own patents. But Yahoo possesses far more patents than Facebook. According to a US government database, Yahoo has over 3,300 patents and published patent applications, while Facebook has 160.
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