YAHOO is suing Facebook over 10 patents upon which it claims the social network is infringing.
The lawsuit was filed in California and claims that Facebook is infringing upon several patents owned by Yahoo, including patents on methods for advertising online.
Yahoo warned Facebook at the end of last month that it would take action if the social network did not enter a licensing agreement for the disputed patents. The firm said that other companies had already licensed the patents in dispute.
In a statement, Yahoo said: "Unfortunately, the matter with Facebook remains unresolved and we are compelled to seek redress in federal court."
Facebook, which recently announced plans for a share offering that could value the company at $100bn, said: "We are 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."
Yahoo was one of the stars of the dotcom era in the late 1990s but has struggled since the emergence of Google and Facebook. Its revenues have declined and in January the company appointed Scott Thompson, formerly of PayPal, as its new chief executive.
Patent disputes have made headlines in recent years, though these have mostly been hardware and software disputes between smartphone manufacturers.
Several social networking companies, including Facebook, have seen an increase in patent claims asserted against them as they move through the IPO process.
However, most of those lawsuits have been filed by patent aggregators that buy up intellectual property to squeeze value from it via licensing deals, and none by a large tech company such as Yahoo.