Rates Technology Inc (RTI) has brought a case against Google in New York. The patent-holding company claims that two of its patents, dating back to 1991 and 1995, have been infringed. Both relate to technology designed to minimising the cost of calls over the internet.

RTI has demanded damages and court costs, and an injunction to prevent Google using the technology.

A Google spokesman told Times Online: "We believe the lawsuit is without merit and we will defend against it vigorously."

Google’s recent deal to buy a 5 per cent stake in AOL for $1 billion could help it sidestep the litigation. Under the terms of the AOL deal, Google Talk users will be able to talk to users of AOL’s TotalTalk system. Analysts noted that Google may also be able to licence AOL’s VoIP (voice over internet protocol) technology.

However, the case will still be an unwelcome distraction for Google. The internet search and advertising company introduced its instant voice and text messaging system in August under the strapline: "They say talk is cheap. Google thinks it should be free". The launch was widely seen as opening an important market for Google. The company could ultimately compete with traditional telecoms groups such as BT, as well as cable and satellite broadcasters, as consumers look to buy television, internet and telephone services in "triple play" bundles from a single vendor.

Google Talk allows users to hold voice conversations with other computer users. It is based on VoIP software, which allows users to make voice calls through their computers and over the internet at a fraction of the cost of traditional services. One of the pioneer companies in this field, Skype, was recently bought by eBay for more than $2.5 billion.

Google's system has been restricted to those who sign up for the company's e-mail service, which was also the subject of a legal wrangle earlier this year. Google was forced to rename the service "Google Mail" in Britain after another company claimed copyright over "Gmail".

According to documents related to the patent case posted online by Search Engine Watch, the blog that first reported the case, a court hearing is to be held on February 3.

In March, The US Court of Appeals for the Federal Circuit affirmed a decision that dismissed a patent infringement action brought by RTI against Nortel Networks.

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