Yahoo and Facebook agreed Friday to settle a legal fight over their patent holdings, ending what was shaping up to be one of the nastier court battles in Silicon Valley in recent memory.
Under the terms of the pact, the two Internet companies will expand an existing partnership, including a deeper integration of Facebook’s tools into Yahoo’s content pages.
The two companies have also agreed to cross-license some of their patent holdings. That agreement forbids either side from suing the other over intellectual property issues in the future, a person close to one of the companies said. What it does not include is any sort of cash payout by Facebook, a win for the social network.
The pact is intended to heal a rift between two companies that less than a year ago began rolling out an extensive collaboration. As part of the agreement, the two companies have agreed to work together to promote big events, hoping to draw increased advertising revenue.
Yahoo took many by surprise this year when it threatened to sue Facebook, claiming the social network had violated some of its oldest Web technologies. It filed suit in March, citing 10 patents in particular.
Several tech commentators criticized Yahoo as a “patent troll” that was simply seeking a big payday. Analysts also expressed surprise, given that Yahoo’s use of Facebook tools appeared to have improved its own business.
Facebook countersued in April, claiming Yahoo had breached some of its own patents, some of which the company had purchased.
Yahoo’s original legal campaign was masterminded by Scott Thompson, then the company’s chief executive. The lawsuit was filed at a particularly delicate time for Facebook: about two months before the company was set to go public.
But Facebook was prepared to wage a long and costly fight to protect itself against Yahoo’s lawsuit, people close to the company said previously.
Settlement talks began shortly after Thompson’s resignation in May, following the revelation that his academic credentials had been misstated. Soon after becoming interim chief executive, Ross B. Levinsohn reached out to Sheryl Sandberg, Facebook’s chief operating officer, to begin negotiating a truce, according to people briefed on the matter.
The two sides spent several weeks working on the outlines of a potential agreement, these people said.
On Friday, Yahoo’s board — including directors who had previously supported the company’s lawsuit — unanimously approved the settlement, one of the people briefed on the matter said.