To clarify before even beginning, Yahoo! does not necessarily uses these techniques, they are just patent applications issued by Yahoo!
Bill Slawski posted an outstanding blog entry at SEW Blog named In Yahoo We Trust - The Link Spam Patent Application discusses one of Yahoo!'s papers and a patent application on fighting Web search spam.
(1) Combating Web Spam with TrustRank which discusses how non spam pages link to non spam pages, as Bill describes in short.
(2) Link-based spam detection which describes, similar to PageRank, the ability to "manually identifying reputable seed pages" and "separating reputable pages from spam pages."