Sunnyvale, Calif. -- DivX, a San Diego-based developer of video compression technology, has filed suit against Sunnyvale-based Yahoo alleging breach of an ad deal between the companies, Reuters reported. DivX said that Yahoo now wants to end a two-year deal struck in September 2007, despite the fact that the company has fulfilled its obligations under the agreement. DivX added that Yahoo's termination of the deal will hurt its bottom line for fiscal 2008 and 2009. "Yahoo is disappointed with DivX's decision to pursue legal action rather than renegotiate this agreement," a Yahoo company spokesman told Reuters. "We intend to vigorously defend ourselves in court, but will reserve further comment until we've had an opportunity to review the suit."