November 5, 2003

Lycos Inc. filed suit against Yahoo Inc.'s Overture Services unit and has stopped using Overture's text advertisements on its Web-search pages, supplanting them with listings from Google Inc.

In a complaint filed in Massachusetts federal court on Oct. 17, Lycos, the Web portal unit of Spain's Terra Lycos, said Overture breached a services agreement requiring Overture to gain Lycos' consent if control of their relationship were to be turned over to a Lycos competitor.

Lycos said Overture neither sought nor obtained Lycos' consent to continue their pact when it was bought by Yahoo. Yahoo's oversight of the relationship ``leaves Lycos in an untenable position by which it is dependent on a major competitor for an essential service,'' Lycos said in the complaint. ``Overture will inevitably disclose Lycos' confidential and trade secret information to Yahoo!, and indeed, on information and belief, Overture has already done so.''

Lycos declined to comment on the suit, which seeks damages and $800,000 in fees it says Overture has failed to pay. An Overture spokeswoman said the company hasn't been served with the lawsuit and isn't fully aware of the allegations. But she said: ``We do not believe that Lycos has a right to take down our listings, and we are currently evaluating our options.''

Overture renewed its ad-distribution pact with Lycos Inc. during the June quarter, according to an Overture filing with the Securities and Exchange Commission. Yahoo announced it would buy Overture in July and completed its purchase in early October. News of the acquisition sparked a debate among investors and industry observers about whether Overture could hold on to portal partners competing with Yahoo, such as Microsoft Corp.'s MSN online unit and Lycos.

Source: Silicon Valley.com

        

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