Yahoo is threatening to sue Facebook for allegedly infringing more than a dozen patents covering how to personalise websites, serve adverts and run a social network.
As part of a strategic review, Yahoo has decided it has failed to squeeze the maximum amount of value from its intellectual property and told Facebook on Monday that it believes Facebook should be paying licensing fees. Otherwise, "we will be compelled to move forward unilaterally to protect our rights", a Yahoo spokesman said.
Yahoo had grown to be one of the dominant internet companies before Mark Zuckerberg created Facebook in 2005, but it has been eclipsed by its rival and other companies. Facebook said it has yet to fully evaluate the claims.