Alleges news feed and video content ads are based on Yahoo patents.
Yahoo has filed a lawsuit against Facebook alleging infringement of 10 of its patents, including patents involving online advertising.
The suit, filed in a San Jose court, accuses Facebook of infringing patents that govern how its social network functions.
"Facebook's entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo's patented social networking technology," the company said in the suit.
"Prior to adopting Yahoo's patented social networking technology in 2008, Facebook was considered one of the worst performing internet sites for advertising."
The suit alleges that Facebook's features including its news feed and video content advertisements are based on Yahoo patents for social networking and online advertising.
Additionally, the suit alleges that Facebook is violating Yahoo patents preventing click fraud.
"Yahoo is harmed by Facebook's use of Yahoo's patented technologies in a way that cannot be compensated for by payment of a royalty alone," the company said in the suit.
"Facebook's use of Yahoo's patented technologies has increased Facebook's revenue and market share because it does not have to recover the costs or time involved in the development of the technology."
A Facebook spokesperson told V3 that the company was only made aware of the suit after early media reports surfaced.
"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 spokesperson said.
"We will defend ourselves vigorously against these puzzling actions."
The suit comes as Facebook is preparing to launch what has become the most anticipated initial public offering in years. The company is set to put itself on the stock market in a deal which could push its value as high as $100bn.
Patent suits have become a common feature on the technology landscape in recent years. Industry heavyweights such as Microsoft, Apple, Motorola and Samsung have been tied up in high-profile patent suits.
This article was originally published on V3.
Shaun Nichols is the US correspondent for V3.co.uk. He has been with the company since 2006, originally joining as a news intern at the site's San Francisco offices.
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