Lycos Inc [LYCOF.PK] has stopped using sponsored search engine listings from Overture Services Inc [OVER] and has sued the company, now owned by Yahoo! Inc [YHOO] for breach of contract, alleging the firm is misappropriating trade secrets.
The firm, a unit of TerraLycos SA, sued on October 16. Lycos confirmed it has started using search services from Google Inc, replacing Overture on several web sites.
The suit claims that since the Yahoo acquisition closed last month, Lycos is now in an untenable position by which it is dependent on a major competitor for an essential service and that competitor make manipulate and take advantage of Lycos.
According to the complaint, Overture was obliged to, but failed to, seek Lycos’s consent before transferring the Lycos contract to a competitor. Lycos said Yahoo was specifically identified in the contract as the principal competitor.
The companies had been working together since September 2001, and renewed the deal this spring.
According to the Lycos complaint, Overture claims that Yahoo’s acquisition of the company does not constitute an assignment – the term used in the contract in reference to transferring the contract to a successor company.
Lycos also claims Yahoo now has access to confidential and proprietary information that Overture uses as part of providing its service, which gives it an unfair advantage. The company claims breach of contract and seeks a court declaration to that effect.
The Yahoo takeover of Overture also recently caused T-Online AG [TOIGn.F], Europe’s largest ISP, to attempt to terminate its Overture contract on the grounds that Yahoo is a competitor. Yahoo succeeded in persuading a German court prior to the acquisition closing that T-Online must continue to use Overture.
This article was based on material originally published by ComputerWire.