YAHOO VS. XFIRE LITIGATION UPDATE: Online gaming company Xfire has countersued Yahoo Inc. in a legal battle over instant-messaging patents.

Yahoo previously had sued Xfire, alleging that Xfire's online messenger service infringes a Yahoo patent on technology co-invented by Chris Kirmse, who subsequently went to work for Xfire.

Yahoo claimed that once at Xfire, Kirmse began to develop, test and offer an instant messenger product that violated the Yahoo patent. Among other things, Xfire's product lets a gamer see if other players identified as "friends" or "buddies" are playing an online game.

In its answer and countersuit filed in federal court in San Francisco, Xfire denied Yahoo's allegations and asked the court to dismiss Yahoo's complaint.

Xfire also filed its own charges, alleging that Yahoo's lawsuit was an attempt to drive Xfire out of business or to force Xfire to sell or license its technology to Yahoo for far less than fair market value to settle the litigation.

Xfire, which said that Yahoo never sent the company the customary "cease and desist" letter before filing its lawsuit, also is seeking unspecified damages resulting from Yahoo's alleged unfair business practices.

Xfire said it generated less than $750,000 in revenue in 2004.

Yahoo, one of the Web's marquee names, reported 2004 revenue of $2.6 billion, excluding fees paid to advertising partners.