Yahoo And Facebook Finally Settle Patent Dispute, Endorse Broader Ad Deal

July 9, 2012 0

Sunnyvale, California — In a novel turn of events, the untimely patent lawsuit initiated by Yahoo, has finally ended. As expected, internet pioneer Yahoo Inc and popular social-networking outfit Facebook Inc have finally agreed to forge a broad Internet advertising and licensing partnership on Friday, laying to rest their dueling patent lawsuits.

The conflict erupted in March when Yahoo originally instituted a lawsuit in the U.S. District Court in San Jose, accusing that social media giant “Facebook’s entire social network model” was based on 10 of Yahoo’s patented technology.

These comprises of patents related to displaying content, messaging users, controlling spam, and other topics. Facebook then struck back with a countersuit in April stating that Yahoo was actually infringing on 10 of Facebook’s patents. And Facebook went to the trouble of naming each offending Yahoo product, such as Yahoo’s home page, Flickr, and Yahoo Finance.

The seemingly endless tussle between Yahoo and Facebook heated up in April with the floundering Internet pioneer accusing the social network star of buying patents just to retaliate in court.

Now this unpredictable truce settles allegations of technology patent infringement that began under the stewardship of ex-Yahoo CEO Scott Thompson, whose 4-month tenure at the beleaguered search giant came to an abrupt end after it was revealed he fibbed on his resume.

According to Reuters, quoting unnamed sources, said that interim CEO Ross Levinsohn is now the front runner for the top job.

News of the settlement between Facebook and Yahoo was first reported by AllThingsD, which reported that today’s hallmark settlement encompasses a new advertising agreement, which would enable Yahoo to pull Facebook’s “like” data and display it on ads on Yahoo. Yahoo interim chief executive Ross Levinsohn and Facebook chief operating officer Sheryl Sandberg facilitated the deal.

Furthermore, both companies have also agreed to license some of the offending technology to each other. Facebook explained in a press release that it will help Yahoo with “large media event coverage” by integrating it on the social network. Levinsohn said it was important for Yahoo to embrace the kind of social-networking features that Facebook has built.

“It is good for consumers that Yahoo and Facebook work together,” he said.

Apart from sorting out other issues, Facebook’s and Yahoo’s significant deal — which expands an ongoing multi-year tie-up that involved mainly empowering Facebook users to share Yahoo content — now consists of cross-licensing of patents and collaboration on advertising offerings during major media events such as the Olympics or annual Super Bowl.

“I’m pleased that we were able to resolve this in a positive manner and look forward to partnering closely with Ross and the leadership at Yahoo,” Sandberg, Facebook’s Chief Operating Officer and newest board member, said in a statement.

“We are excited to develop a deeper partnership with Facebook, and I’m grateful to Sheryl and her team for working hard together with our team to formulate this dynamic agreement. We are looking forward to building on the success we have already seen to provide innovative new products and experiences for both consumers and sponsors,” Levinsohn, interim CEO of Yahoo, said in a statement. “Combining the premium content and reach of Yahoo! as the world’s leading digital media company with Facebook provides branded advertisers with unmatched opportunity.”

Apparently Yahoo, the once iconic Internet company, has desperately struggled to find its footing in a digital world dominated by the likes of Apple, Google, Facebook, and Twitter.

Moreover, the company’s leadership has been in a state of upheaval since turning down Microsoft’s $44 billion takeover offer in 2008, plowing through four chief executives in as many years. The company would not say when a final decision on a permanent CEO will be made.

Yahoo’s move to sue Facebook last spring was eventually pinned on Thompson, which had invited some criticism that it was trying to wring cash out of a company about to go public in Silicon Valley’s largest coming-out party. Yahoo already had enough problems to deal with in the wake of shaky earnings and Carol Bartz’s forced departure last year.