Is Facebook vs. Yahoo OVER?

Facebook (NASDAQ:FB) and Yahoo (NASDAQ:YHOO) have reportedly settled their patent dispute with a deal that will strengthen content partnership and advertising relationships between the two. Executives at the two companies have completed an extensive strategic settlement, according to AllThingsD.

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The agreement will include a joint advertising sales effort and cross-licensing of several patents. Facebook will also allow Yahoo to be the first partner to feature information about its users’ Likes in display advertising. Facebook may also later pay to license other Yahoo patents not included in this deal. There will reportedly be no actual cash payment as part of this deal. Facebook had recently paid Microsoft (NASDAQ:MSFT) $550 million for a transaction related to AOL patents.

Both companies’ boards of directors have reportedly agreed to the deal and it may be announced later on Friday.

Settlement discussions were initiated by Yahoo interim chief executive Ross Levinsohn, who started talks with Facebook chief operating officer Sheryl Sandberg soon after the departure of Yahoo’s former CEO Scott Thompson. Thompson had started the court battle, suing Facebook and promising his board that it would lead to a big financial payoff. However, Facebook responded aggressively by launching its own countersuit. While Yahoo possibly had a strong case, its board may have been worried about the social network’s preparations for a long-drawn and costly court battle.

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