updated 03:24 pm EDT, Mon June 4, 2012
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The patent battle between Yahoo and Facebook may be drawing to a close, AllThingsD has been told, as executives from the two companies are said to be working out a settlement agreement. Sources close to the negotiations have indicated that a settlement putting aside the suits and countersuits could emerge in the coming weeks, opening the possibility that the businesses might return to a close partnership.
At issue in the talks is the cross-licensing of patents, as well as deeper integration of Facebook into Yahoo, and vice versa. Facebook is said to be reluctant to pay too much to Yahoo for access to its patent portfolio, and the search company may have to settle for a much closer working relationship with the social network instead of the massive cash sum initially expected from the litigation.
The rift between the two companies was born filing suit against the social network for alleged infringement of 10 patents, only to add two more within a few weeks.
As the proceedings moved on, Yahoo threatened greater action, claiming infringement on another 16 patents. Facebook countersued and eventually bought multiple patent portfolios from AOL and Microsoft for future litigation protection.
Throughout the legal action, Yahoo has claimed that it is owed not just past royalties, but an ongoing royalty, as the company believes Facebook would be allowed a "free ride" were it not made to continue paying for the technologies underlying its site. Facebook has argued that Yahoo's actions represent an assault on the freedom of technologies now standard to the infrastructure of the Internet.