Is the Yahoo! and Facebook Battle About to End?

The patent conflict between the world's leading social network and the former leader of search could soon come to an end. That's according to AllThingsD, whose sources say that the two companies have been "hammering out the outlines of a deal over the last several days to end their contentious patent infringement litigation." Facebook FB, which had the most hyped IPO of all time, and Yahoo! YHOO, which some believe had the potential to go to $100 under the guidance of its last CEO, began battling early in the spring. At that time, Trip Chowdhry, the Managing Director of Equity Research at Global Equities Research, told Benzinga that he supported Yahoo!'s decision to sue. "We are entering a place where you have to have protected innovation," said Chowdhry. "So I think Yahoo! is doing the right thing. The company has to protect its intellectual [property]. If you create something, it's very easy for [someone else] to copy. Think about it – Yahoo! is a pioneer of intellect. These people have defined the industry, and the latecomers like Facebook come and copy 10 years of innovation at Yahoo! and take a free ride. It's just not right." Now AllThingsD is reporting that a settlement could come in just a few weeks. "Advanced negotiations will put aside the lawsuits and counterclaims between the one-time close partners and return them back to what could be an even closer relationship," Kara Swisher wrote. That's an interesting turn of events, to say the least. One would imagine that a patent battle of this magnitude could tear the two companies apart forever. But if Yahoo! and Facebook can put aside their differences and focus on the greater good, things might improve for both firms. With Facebook looking to strengthen its presence in photo distribution, and with Yahoo! attempting to make a comeback in search (a comeback that could include its new browser plug-in, Yahoo! Axis), the two firms may be smart to form a new alliance. According to AllThingsD, the "key terms" being discussed by Facebook and Yahoo! executives include "massive cross-licensing of patents between the Internet giant and the social networking kingpin and an even deeper integration of Facebook into Yahoo and vice versa, which has been a key element of improved engagement of late on Yahoo." But while Facebook didn't mind forking over $550 for a slew of patents -- which it technically purchased from AOL AOL through Microsoft MSFT, who purchased the patents a few days prior -- AllThingD's sources claim that the social networking giant is "not likely" to pay Yahoo! a pretty penny for its patents. Follow me @LouisBedigianBZ