yahoo hq More Pains for Yahoo, DivX Sues it Over Ad Deal

Divx, the developer of video compression software, has filed a lawsuit against Yahoo for trying to end a two-year advertising services agreement with DivX. The lawsuit was filed in California Superior Court in Santa Clara County and maintains that the termination would hurt the financial results of DivX for the year 2008 and 2009.

"Yahoo’s decision to breach is unjustified given DivX’s fulfillment of its obligations under the agreement," said DivX Chief Executive Officer Kevin Hell, adding that his company would aggressively pursue legal action.

Yahoo on the other hand wants to somehow restructure the agreement and settle things out of court. According to a Yahoo Spokesman:

Yahoo is disappointed with DivX’s decision to pursue legal action rather than renegotiate this agreement. We intend to vigorously defend ourselves in court, but will reserve further comment until we’ve had an opportunity to review the suit,