Facebook and Yahoo avert legal fight and sign strategic deal
The deal averts a possible legal battle that could be characterised as the the old web versus the new social web.
The row began in February when Yahoo! tried to force force Facebook to licence as many as 20 patents for technologies or face legal action.
The tempo of the row rose again in April when Facebook launched a counter-suit against Yahoo. The social network accused Yahoo of infringing 10 of its patents, which related to its home page, display ads and Flickr photo sharing service.
According to AllthingsD, quoting sources close to the situation, the deal will see an expansion of their existing partnership that includes a joint ad sales arrangement and some cross-licensing.
The deal has gotten approval from the companies’ boards — in fact, Yahoo’s directors agreed to it this morning in a telephonic meeting. It will be announced sometime later today.
No actual cash payment will change hands under terms of the deal over the patents, in contrast to the $550 million that Facebook paid Microsoft recently in another transaction related to AOL patents.
But sources said Facebook and Yahoo hope there will be significant upside in several possible advertising and other business deals between the pair that could yield large revenues if executed well, AllthingsD reports.
The story adds that Facebook could also “pay to license other Yahoo patents not included in this deal” at a later date.
The patent lawsuit was drafted by Scott Thompson and left some in Yahoo, as well as many in the industry, uneasy. It was seen as a desperate move from a company whose fortunes were waning.
A deal might have been signed as Thompson suddenly departed Yahoo in May. He left amid rumours of health concerns. His exit ended a turbulent five months at the helm that were dogged by accusations that he had embellished his credentials for the role.
Questions over Thomspon’s qualifications emerged at the start of May when activist shareholder Daniel Loeb of hedge fund Third Point accused Thompson of adding a bogus bachelor’s computer science degree to his CV.
Yahoo is currently drawing to a close its search for a new CEO.