Yahoo Said to Be in Talks to Resolve Facebook Patent Suit

Yahoo! Inc. is in negotiations to resolve a legal dispute with Facebook Inc., which it accused of infringing patents, according to a person briefed on the matter.

Yahoo has undergone board and management change since it filed the lawsuit in March and is engaged in the talks to help improve ties with Facebook, said the person, who didn’t want to be identified because the matter is private.

Under former Chief Executive Officer Scott Thompson, Yahoo alleged that social-networking provider Facebook infringes patents covering such functions as Internet privacy, advertising and information sharing. Facebook countersued in April, accusing Yahoo of infringing 10 of its patents. Thompson resigned the following month, amid pressure from investors, after failing to correct misstatements in his academic record.

Caryn Marooney, a spokeswoman for Menlo Park, California-based Facebook, declined to comment yesterday, as did Dana Lengkeek, a spokeswoman for Sunnyvale, California-based Yahoo.

Facebook bulked up on intellectual property in the wake of the Yahoo lawsuit. It said in April that it’s paying $550 million for some of the patents that Microsoft Corp. agreed to buy from AOL Inc. Facebook also acquired patents from International Business Machines Corp., a person with knowledge of the matter said in March.

Yahoo, in the lawsuit filed March 12 in federal court in San Jose, California, sought an order barring Facebook from infringing the 10 patents. It also sought triple damages. Facebook later accused Yahoo of infringing 10 patents through its home page and the Flickr-photo sharing service.

“If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition or results of operations,” Facebook, which went public last month, said in a March 27 filing.

The settlement talks were reported earlier this week in the AllThingsD blog.

The case is Yahoo! Inc. v. Facebook, 12-cv-01212, U.S. District Court, Northern District of California (San Jose).

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