Yahoo filed Monday in federal court in California, accusing Facebook of infringing on 10 of the search company's patents. The lawsuit claims that Facebook copied Yahoo's patents in technologies related to advertising, privacy, site customization, social networking and integrated communications in social networking.
Complicating matters for Facebook is that the world's largest social network is expected to in May. With potential investors looking closely at the company, now is not the time for Facebook to be facing a lawsuit. That could very well be part of Yahoo's plan.
Yahoo, which similarly sued Google before its IPO in 2004 and picked up a chunk of Google stock in return, is well aware of the scrutiny that Facebook is under. It may also be hoping that Facebook will want to resolve the lawsuit quickly.
That view could possibly mean a better deal for financially struggling Yahoo, analysts said.
"This [lawsuit] will put a cloud over [Facebook's IPO], putting extra pressure on Facebook to settle," said Rob Enderle, an analyst with the Enderle Group. "Basically, Yahoo is using the IPO as a lever to force Yahoo to settle when they otherwise wouldn't... That is why Yahoo is doing this now."