Yahoo has argued that up to seven of its patents have been infringed by a
contextual ad network called
AOL acquired in 2007 for $340m (£227m).
Yahoo had bought its own ad network, BlueLithium, a month prior to AOL's purchase for $300m (£200m).
Time Warner has approached the US District Court for the Southern District of New York to settle the issue.
"The parties' attempts to negotiate a settlement of the Yahoo defendants' patent infringement claims over several months until March 26 2009 have been unsuccessful," read the Time Warner complaint filed on Tuesday, as seen by Reuters.
A Yahoo spokeswoman said that the lawsuit was filed while the parties were discussing a possible licensing deal for some of the patents.
"Yahoo is now in the process of reviewing the allegations made in the complaint," she said. "Yahoo is confident that the patents are strong and will vigorously defend them."
AOL could not immediately provide comment.
The tension between the two companies contrasts with the friendly relations they shared at the end of last year when a merger deal was on the table.
In related news, a report in The New York Times claims that several hundred Yahoo employees will be made redundant next week when the firm releases its first-quarter financial results. Yahoo has already reduced its headcount in 2008 by more than 2,000.
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