London: Facebook and Yahoo have agreed to form a web advertising alliance and haave also settled their patent litigation case, The Telegraph reported Monday.
The companies said they will work together to bring advertisers new ways to promote their products across Yahoo and Facebook's websites.
The settlement includes a cross-license agreement, according to a statement Monday.
Yahoo filed the original patent lawsuit under the leadership of Scott Thompson, who resigned as chief executive officer in May amid pressure from investors, after failing to correct "misstatements in his academic record", the newspaper said.
Although Facebook is the world's largest social network, Yahoo is still a major player in America and its news service remains one of the biggest in Britain.
The combined access for advertisers to both sites will, the companies claim, work to their mutual benefit.
In the March lawsuit, Yahoo alleged that Facebook infringes patents covering such functions as internet privacy, advertising and information sharing.
Facebook, the largest social-networking service, countersued in April, accusing Yahoo of infringement.