San Diego – After a long and vicious battle over competing patent infringement claims, two of the Internet’s most popular destinations – Facebook.com and Yahoo.com – have agreed to drop respective lawsuits and license patents to each other. The original Yahoo lawsuit was initiated in March 2012, during the short-lived leadership of its controversial CEO, Scott Thompson. Facebook fought back by filing its own patent infringement lawsuit in April.
Thompson was subsequently let go as a result of a resume scandal, but the parties were already knee deep in litigation. Yahoo’s patent infringement complaint was premised on the allegation that Facebook was profiting from Yahoo’s ideas and claimed that Facebook infringed on 10 critical Yahoo Internet technology patents. Two additional patents were later added to the case. The patents covered Internet advertising, privacy controls, social networking and other important Yahoo technology. However, before the two combatants could step into the courtroom, both Facebook and Yahoo issued statements indicating that both companies had agreed to settle their disputes outside of court.
Despite the fact that no money will change hands, the new patent alliance will allow Facebook and Yahoo to share advertising and content. Experts further anticipate that the new agreement will help Yahoo recover some of the revenue it recently lost when large marketers decided to spend less on Yahoo advertising and increase spending on Facebook.
In anticipation of the partnership, both parties have already begun work on ads for the other’s website and Yahoo has agreed to feed coverage of major news events through the social networking website. In addition to saving countless dollars in litigation expenses, Facebook will now have a greater opportunity to tailor ads to fit the more specific interests of its over 900 million users in heavily trafficked Yahoo owned areas. It is anticipated that the new partnership will also help the flagging financial status at Yahoo and assist Facebook in winning over skeptical investors. Experts hope that the new agreement between Facebook and Yahoo will set a positive example for corporate America and encourage creative compromise, rather than settling disputes with litigation.