News

Yahoo and Facebook call cease-fire with patent deal

Yahoo and Facebook have called a cessation to legal hostilities with a deal to share patents.

The truce settles a dispute started by Yahoo’s former chief executive Scott Thompson that has been brewing over the last few months and averts a lengthy legal battle. The lawsuit filed in March by Thompson claimed infringement of ten of Yahoo’s patents, the majority of which relating to online advertising.

Yahoo and Facebook have agreed to license their patents to each other and form a content-sharing and advertising alliance expanding on their existing partnership. The patent sharing also means that neither company will be able to sue the other in the foreseeable future.

This deal could allow Yahoo to pull back some of the ad spend that has been shifting on to the social network and Facebook will benefit from showing its tailored ads on Yahoo’s high traffic websites.

“Combining the premium content and reach of Yahoo as the world’s leading digital media company with Facebook provides branded advertisers with unmatched opportunity,” says Yahoo interim chief executive Ross Levinsohn.

Thompson was removed from his role as chief executive of the struggling search giant following a boardroom skirmish with activist shareholder Daniel Loeb, hedge fund Third Point chief executive.

Facebook recently bolstered its previously weak patent position with a $550m deal to buy and license a cache of AOL patents from Microsoft. It also bought approximately 750 patents from IBM following the Yahoo lawsuit to try and fortify its legal position.

David Hing, London