Facebook, Yahoo End IP War To Form Advertising Alliance (Law360)

By Stewart Bishop

Facebook Inc. and Yahoo Inc. said Friday that they have settled all pending intellectual property claims and launched a new advertising partnership, bringing an end to a closely watched patent fight between the two Internet giants.

The new strategic alliance includes a patent portfolio cross-license and both companies say they will work together to provide consumers and advertisers with "premium media experiences" on both Facebook and Yahoo.

Additionally, the companies say they will work on bringing Yahoo's sizeable media event coverage to Facebook users by working together on social integrations for Yahoo's site.

Interim Yahoo CEO Ross Levinsohn and Sheryl Sandberg, chief operating officer at Facebook, expressed optimism about the new arrangement.

"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," Sandberg said. "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."

Levinsohn said Yahoo was excited to develop a closer partnership with Facebook.

"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," Levinsohn said. "Combining the premium content and reach of Yahoo as the world's leading digital media company with Facebook provides branded advertisers with unmatched opportunity."

In the future, Facebook and Yahoo say they will work collaboratively on several "tent-pole and anchor events" over the next several years to provide "unparalleled experiences" for consumers as well as top-shelf sponsorship opportunities for advertisers.

The announcement comes on the heels of settlement talks the have been going on for weeks, according to court filings.

The newfound cooperation stands in stark contrast to the events that began in March when Yahoo made good on a threat to take action against Facebook if the social media giant didn't agree to a licensing deal, and sued Facebook alleging infringement of several patents covering areas like advertising, privacy and social networking.

Yahoo sought treble damages and a permanent injunction, claiming Facebook has been aware of the patents since at least Feb. 27, when Yahoo notified it of the alleged infringement.

Facebook struck back with counterclaims in early April, and asserted that Yahoo infringed 10 of Facebook's social networking and advertising patents.

On May 3, Yahoo informed Facebook that it might be infringing 16 patents in addition to those that Yahoo had already asserted against the social media company.

In a filing with the U.S. Securities and Exchange Commission, Facebook said it received a letter from Yahoo on April 23 stating that Yahoo believed 16 patents it claims to hold "may be relevant" to open-source technology it alleges is being used in Facebook's data centers and servers.

The Yahoo patents-in-suit are U.S. Patent Numbers 5,983,227; 6,907,566; 7,100,111; 7,269,590; 7,373,599; 7,406,501; 7,454,509; 7,599,935; 7,668,861; 7,698,315; 7,747,648; and 7,933,903.

The Facebook patents-in-suit are U.S. Patent Numbers 6,216,133; 6,236,978; 6,288,717; 6,411,949; 7,603,331; 7,827,208; 7,945,653; 8,005,896; 8,103,611; and 8,150,913.

Yahoo is represented by Charles K. Verhoeven, Jennifer A. Kash and Kevin A. Smith of Quinn Emanuel Urquhart & Sullivan LLP.

Facebook is represented by Stephen C. Neal, Michael G. Rhodes, Heidi L. Keefe and Mark R. Weinstein of Cooley LLP and William F. Lee, Cynthia D. Vreeland, Mark D. Selwyn and Joseph F. Haag of WilmerHale.

The case is Yahoo Inc. v. Facebook Inc., case number 3:12-cv-01212, in the U.S. District Court for the Northern District of California.

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