Updated: Facebook and Yahoo agree to end patent fight

Facebook and Yahoo have agreed to settle patent infringement claims between the two and agreed on an advertising deal.

The companies on Friday announced that they had reached a cross-licensing deal and would collaborate on advertising deals and promoting events.

"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," said interim Yahoo chief executive Ross Levinsohn. 

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

Yahoo filed suit against Facebook in March claiming that the company had based its "entire business" on 10 key patents it owned. The company cited patents it held regarding streaming video, advertising and timeline content.

Facebook soon fired back with a patent suit of its own, claiming that Yahoo was infringing upon patents it held in the social networking and web-based application spaces.

"Yahoo's new leaders are driven by a renewed focus on innovation and providing great products to users," said Facebook chief operating officer Sheryl Sandberg.

"Together, we can provide users with engaging social experiences while creating value for marketers."

The Yahoo chief executive who launched the patent claim, Scott Thompson, left the firm in May after a scandal over his CV.

The battle between Facebook and Yahoo has been highlighted in the debate over patent infringement claims. The rash of patent filings in recent years has drawn calls for intellectual property reform laws.

Figures ranging from Mark Cuban to US District Court Judge Robert Posner have called on lawmakers to overhaul the patent system and make filing suit for broad-ranging patents more difficult for companies.