As part of their new agreement both companies have signed a cross-license deal which allows access to one another’s patent portfolio as well as a new advertising partnership.
Yahoo filed a lawsuit against Facebook in March 2012 in the U.S. District Court in San Jose, California, stating that the "patents-in-suit are a reflection of Yahoo’s research and development achievements." Yahoo was an innovator in methods of advertising, privacy controls, and social networking, according to the law suit document.
Yahoo had claimed that in terms of social networking "Yahoo! recognised the importance of social interaction on the internet and developed technology that allows users to customize information about themselves, join groups of others with the same interest as themselves, and share interesting information."
Yahoo said in the complaint that these terms are in what the company calls the "648 Patent" or the "Yahoo Social Networking Patent."
In the complaint Yahoo also pointed out that Facebook was started 10 years after yahoo was founded and Yahoo claims this is largely attributed to Facebook using Yahoo’s patented technology. Yahoo had claimed that features like the News Feed on Facebook were patents to Yahoo.
Facebook then hit back at Yahoo with its own lawsuit the following month.
Facebook denied Yahoo’s claims of Patent infringement and said that Yahoo has infringed 10 Facebook patents.
In Facebook’s response to Yahoo’s lawsuit, the company accused Yahoo of infringing on Facebook patents by way of the Yahoo home page, content optimization and relevance engine (C.O.R.E), the Yahoo Flickr photo sharing service, along with Yahoo Finance, sports, news, games, movies, shopping, travel, autos, and advertisements displayed throughout Yahoo.
Facebook also said that Yahoo was infringing upon patent violations such as "the Photostream, recent activity and groups activity on the Yahoo! flickr photo sharing service."
Sheryl Sandberg, Facebook’s COO, says the company is pleased to resolves the patent dispute
"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!," said Sandberg in a statement. "Yahoo!’s new leaders are driven by a renewed focus on innovation and providing great products to users. Together, we can provide users with engaging social experiences while creating value for marketers."
The advertising partnership will aid Yahoo! in the advertising arena as they can tell current and potential advertising customers that they have a concrete social aspect.
Yahoo’s large event coverage will also be brought to Facebook consumers. Facebook social integrations will be available on the Yahoo website.
"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 develop 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," said Ross Levinsohn, interim CEO of Yahoo!. "Combining the premium content and reach of Yahoo! as the world’s leading digital media company with Facebook provides branded advertisers with unmatched opportunity."
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