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Facebook Counter Sues Yahoo! In Patent Dispute


The patent face-off between Yahoo! Inc. (YHOO) and Facebook intensified after the social networking giant Tuesday filed a counter-suit in a Californian court accusing Yahoo of having indulged in patent violations.

The counter-suit is the latest in an exchange between the two companies and follows a recent lawsuit by Yahoo that Facebook impinged upon its innovations.

In a court filing, Facebook charged Yahoo of infringing upon ten of its patents covering photo tagging, advertising, online recommendations, among others. Five of the patents in question related to Yahoo's online advertising business, which fetches 80 percent of the Internet giant's 2011 revenue.

Facebook has sought unspecified damages, including payment of attorney fee, while requesting the jury to quash the suit filed against it by Yahoo.

In a statement, Facebook general counsel Ted Ullyot said, "From the outset, we said we would defend ourselves vigorously against Yahoo's lawsuit, and today we filed our answer as well as counter-claims against Yahoo for infringing ten of Facebook's patents."

"While we are asserting patent claims of our own, we do so in response to Yahoo's short-sighted decision to attack one of its partners and prioritize litigation over innovation," Ullyot added.

The counter-suit is the latest twist after Yahoo in a suit last month charged Facebook of violating between 10 to 20 of its patents involving technical mechanisms in Facebook's ads, privacy controls, news feed and messaging service.

As relief, Yahoo has demanded unspecified damages, a trial and an injunction against further infringement by Facebook. Yahoo is said to currently hold more than 1,000 patents.

With key patents having the potential to tilt the scale in one's favor, tech companies are anxious to tighten their grip on such innovations, often locking them in lengthy suits with other companies. Pioneers such as Apple, Inc. (AAPL) and Microsoft Corp. (MSFT), as well as Samsung Electronics and Motorola Mobility are among prominent companies enmeshed in such litigations.

Meanwhile, investors are in a frenzy, bracing for the imminent and much hyped Facebook IPO expected between April and June 2012. Menlo Park, California-based Facebook in February filed for an up to $5 billion IPO, valuing the company at about $100 billion.

Facebook was co-founded by its CEO Mark Zuckerberg in 2004 and has seen phenomenal growth over the years. As of December 31, 2011, Facebook had a total of 845 million most active users, up 39 percent from last year.

YHOO is trading at $15.18, down $0.27 or 1.78%, on a volume of 18 million shares on the Nasdaq. In after hours, the stock gained 0.20%.

by Ravi M .RTTNews Staff Writer

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