Yahoo appears to be turning to patent licensing to boost its fortunes.
The foundering Web pioneer is threatening legal action against Facebook if the social-networking giant does not agree to license 10 to 20 patents held by Yahoo, according to The New York Times. The patents at issue relate to advertising, Web site personalization, social networking, and chat services, the newspaper reported, citing unidentified people briefed on the matter.
Yahoo didn't respond to a CNET request for comment but told the Times that, "We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights."
Facebook said it had only just learned of matter and could not comment on the matter without further study.
"Yahoo contacted us at the same time they called the New York Times and so we haven't had the opportunity to fully evaluate their claims," a Facebook representative told CNET.
The news comes as Yahoo has grown increasingly dependent on Facebook for traffic. The two companies announced a new feature last September that integrates Yahoo News with Facebook so people can easily see what articles their friends are reading. Since integrating with Facebook, Yahoo News has seen its daily traffic more than triple, according to a Facebook developers blog.
Yahoo's fate has been in a state of flux since in recent months since a leaked memo from Yahoo co-founder Jerry Yang indicated the company could be for sale. One of the most storied companies of the Web's first phase, Yahoo has been plagued in recent years by a tepid stock price, high employee attrition rate, and sputtering product development efforts.
The patent claims come at a sensitive time for Facebook, which earlier this month formally declared its intent to raise $5 billion in an initial public offering later this year. Less than two weeks before Google's IPO in 2004, the future Web behemoth settled a patent infringement dispute with Yahoo by agreeing to issue 2.7 million shares common stock to its one-time partner.
Patent fights have become a popular source of revenue lately, especially in the smartphone sector. Google recently paid $12.5 billion for Motorola Mobility, an acquisition that initially surprised many until Google said it was interested in the troubled cell phone maker mainly for its strong patent portfolio. Motorola has mixed it up with Apple in several courtrooms around the world, but the two recently clashed over patents in Germany, forcing Apple to temporarily remove older iPhones from its online store in that country.
Meanwhile, Microsoft has inked patent-protection deals with half the world's original design manufacturers, which pay undisclosed royalties to the software giant for use of Google's Android and Chrome operating systems used in smartphones, tablets, and other consumer electronics. Rather than going after Google for patent violations, Microsoft has targeted device makers, pressing them to license Microsoft's patents that it alleges Android and Chrome infringe upon.