Web pioneer Yahoo Inc (YHOO) is taking social networking giant Facebook to court, alleging infringement of 10 patents related to social networking, customization, privacy, advertising and instant messaging.

While Yahoo did not specify the extent of damages, they are looking for a big amount, based on their ability to prove Facebook’s blatant and intentional infringement. Yahoo is also looking for an injunction against Facebook until the matter is decided through trial.

Facebook, for its part, claimed that Yahoo did not discuss the matter with them, but went straight to court instead, although “people familiar with the matter” say that the companies had been in private conversation for months (media sources).

As things stand now, Yahoo’s actions are conspicuous enough to catapult Facebook into action. Particularly so since Facebook could be in a delicate situation, considering its soon-to-be-launched, much-publicized IPO.

It is possible that the strategic review undertaken by Yahoo following the departure of CEO Carol Bartz revealed opportunities such as these for additional revenue generation. Yahoo has been struggling in search against archrival Google Inc (GOOG) for some time now. However, it is not new to the game; it successfully extracted shares valued at $300 million from Google in very similar conditions.

More recently, Facebook has been chipping away at Yahoo’s extremely successful and lucrative display business, so it may be time for Yahoo to take similar steps.

Facebook would probably do well to solve the matter quickly before there is too much press, unless of course they can quickly and adequately prove that Yahoo’s claims are false. Countersuing may not be such a good idea — Facebook has just 160 patents versus Yahoo’s 3,300 (including published patent applications). Under the circumstances, Yahoo might just be able to twist its arm.

The Zacks Rank on Yahoo shares is #3, which translates to a short-term Hold recommendation.

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