"Facebook's entire social network model, which allows users to create profile for and connect with, among other things, persons and businesses, is based on Yahoo's patented social networking technology," Yahoo's lawsuit reads. The the 10-20 patents in question reportedly cover an array of functions including the NewsFeed feature, advertising practices, website personalisation, and aspects of messaging. Yahoo is asking for triple damages to strip Facebook's ability to use any technology that is derived from the patents in question. The two companies were in talks to negotiate license terms for these patents, though those have obviously broken down.
While Yahoo taking the gloves off against a partner company seems rather brash, multiple sources within the company told AllThingsD that Yahoo's new CEO, Scott Thompson, is the one behinds the reigns of the lawsuit, "the decision to move was closely held, sources said, with only Thompson and legal chief Michael Callahan largely working on it."
However, if this lawsuit plays out anything like Yahoo's similar one against Google in 2004, we can expect a rapid settlement right about the time FB goes up for its IPO. Yahoo made this statement about the proceedings,
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.
and Facebook has responded with a statement of its own,
We're disappointed that Yahoo's effort to engage with us was limited to a few short phone calls and that we continue to learn of new developments about a long-time partner through the press. We will defend ourselves vigorously against these puzzling actions.