Facebook and Yahoo have agreed to form a web advertising alliance and also settled their patent litigation case.
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The companies said they will work together to bring advertisers new ways to promote their products across Yahoo and Facebook’s websites. The settlement includes a cross-license agreement, according to a statement today.
Yahoo filed the original patent lawsuit under the leadership of Scott Thompson, who resigned as chief executive officer in May amid pressure from investors, after failing to correct “misstatements in his academic record”.
Although Facebook is the world’s largest social network, Yahoo is still a major player in America and its news service remains one of the biggest in the UK. The combined access for advertisers to both sites will, the companies claim, work to their mutual benefit.
In the March lawsuit, Yahoo alleged that Facebook infringes patents covering such functions as internet privacy, advertising and information sharing. Facebook, the largest social-networking service, countersued in April, accusing Yahoo of infringement.
Ross Levinsohn stepped in as interim chief executive after Thompson’s departure and is being considered as a permanent CEO, among other candidates, people familiar with the matter have said. Levinsohn and Sandberg helped work out the terms, according to other people familiar with the matter.
“We were able to resolve this in a positive manner and look forward to partnering closely with Ross and the leadership at Yahoo,” Sheryl Sandberg, Facebook’s chief operating officer, said in the statement. “Yahoo’s new leaders are driven by a renewed focus on innovation and providing great products to users.”
Yahoo, in the lawsuit filed March 12, sought an order barring Facebook from infringing 10 patents. It also sought triple damages. In the countersuit, Facebook accused Yahoo of infringing 10 patents through its home page and the Flickr-photo sharing service.
The end to the patent dispute may free Facebook from potential challenges the social-network website warned investors about in March.
“If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition or results of operations,” Facebook, which sold shares in an initial public offering in May, said in a March 27 filing.
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