Facebook and Yahoo End Lawsuit With ‘Patent Peace Deal’

Facebook and Yahoo End Lawsuit With ‘Patent Peace Deal’

patent infringement lawsuit and countersuit, Yahoo! Inc. (NASDAQ:YHOO) and Facebook Inc (NASDAQ:FB) today agreed to an extensive strategic deal.  Yahoo directors concluded the deal this morning over a telephonic meeting, as reported by AllThingsD.

According to sources, the deal involves expansion of their partnership with a joint advertising sales effort, and cross-licensing of some key patents between the pair. The most notable point of the deal is an arrangement to jointly sell big events and other packages to advertisers. Also Facebook Inc. will allow Yahoo! Inc.  to feature information about its users’ “Likes” in actual display advertising on Yahoo.

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The earlier contracts between the internet giants will remain intact, which will allow users that sign up for Facebook to automatically import their Yahoo email address book. Internet Giant Yahoo originally filed a lawsuit in March at the U.S. District Court in San Jose, alleging “Facebook’s entire social network model” was based on patented Yahoo technology. The lawsuit was filled on the day of the Facebook Inc IPO. https://www.valuewalk.com/2012/05/facebook-inc-fb-faces-15-billion-lawsuit-on-ipo-day/The price tag was a whopping $15 billion. And as was expected Facebook fired back with a countersuit in April over 10 more patents.

The deal was negotiated between Yahoo interim CEO Ross Levinsohn and Facebook COO Sheryl Sandberg, among others. On the Yahoo side, the lawsuit was initially handled by former CEO Scott Thompson who at that time believed that the patent lawsuit could result in payoff of billions of dollars. However, under the current agreement no cash will be exchanged but Facebook could later pay to license other Yahoo patents not included in this deal.

Though an agreement has been reached,  many feel that Yahoo could have won the lawsuit as it had a strong case backed by intellectual property in a range of key digital arenas. But sensing Facebook’s approach for a long and expensive battle might have changed Yahoo’s mind to go ahead with the suit.

It remains to be seen how well the synergy between the two Silicon Valley companies moves ahead in line with stakeholder’s expectation. But what is certain is the deal will certainly help Levinsohn’s chances of scoring over his rival Hulu CEO Jason Kilar, for the coveted CEO job. It was Levinsohn who reached out to Facebook COO Sheryl Sandberg after Thompson was deposed, in hopes of resolving the lawsuit. At the time of this article, Kilar has just announced his decision not to seek the CEO post, so it looks like Levinsohn will be the next CEO, regardless.

The deal is expected to be officially announced later today.