Kara Swisher

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Exclusive Joint Interview: Facebook’s Sandberg and Yahoo’s Levinsohn Talk About Patent Peace

Much to the relief of many (and perhaps the consternation of a few intellectual property lawyers), Yahoo and Facebook officially settled their ugly patent lawsuit earlier today and also expanded their longtime partnership.

After the Silicon Valley companies — one an iconic Internet portal and the other the powerful social networking giant — agreed to formally cross-license large parts of their patent portfolio, not to sue each other over other similar intellectual property and work together on big advertising offering, Facebook COO Sheryl Sandberg and Yahoo’s interim CEO Ross Levinsohn got on the phone with me for an exclusive joint interview.

Sandberg began by noting that Facebook was not keen on battling its longtime partner, despite tough talk in its countersuit against Yahoo’s initial lawsuit.

“It’s important for us to have strong partners using our technology to make their experiences social,” she said. “[This patent battle] has been a weird anomaly in relationship of these two companies.”

Levinsohn said that is why he immediately moved to settle with Facebook as soon as he got the job to lead Yahoo temporarily in May. He replaced ousted CEO Scott Thompson, who had aggressively pushed for the initial patent infringement lawsuit against Facebook.

“It’s important for us as a company to fully embrace social and fixing the damaged relationship with Facebook was at the top of my list when I was asked to take this role,” he said. “It’s good for consumers that Yahoo and Facebook work together.”

He pointed to the pre-lawsuit success of Yahoo’s Social Bar feature, which connects its audience with Facebook friends and which has attracted 90 million users. “It was a taste of how well our two companies could work together,” he said.

Sandberg, who acknowledged that Facebook was both surprised and deeply angered by the Yahoo lawsuit, said that the kinds of situation that arise out of patent fight are bad for Silicon Valley overall.

“There is different means to play out competition and companies playing that out over patents is not it,” she said. “Yahoo and Facebook had a very good relationship and what happened was not in keeping with that relationship.”

Levinsohn noted that Yahoo needed a social element in its massive content offerings that it had unsuccessfully tried to inject itself before turning to Facebook several years ago.

Now, he noted, the “white board can be filled” again with new cross-company ideas.

While the pair would not go into many details about the patent arrangements, they said there will be no patent lawsuits in the future. The deal encompasses licensing of a little more than half of Yahoo’s rich portfolio of digital patents and an agreement not to sue on the remaining ones, which Facebook could license or even buy in the future.

“It’s really a good step in the right direction of the company,” said Levinsohn, who gave credit to Yahoo’s board for pulling back from the patent litigation and making nice with Facebook legally. “We are also grateful that Facebook dug in on this.”

Added Sandberg, pointing out the obvious need for both parties — who have bigger and more difficult fish to fry: “From our point of view, we need cooperation around Silicon Valley — we’d rather spend time on partnerships than on legal fighting.”

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