Yahoo settles patent fight with Facebook Yahoo has settled the patent battle with Facebook that its ousted chief executive Scott Thompson began in March, but without any of the direct financial reward he had hoped for. No money will change hands in a settlement that will see Facebook and Yahoo licence each other's patents and expand an existing advertising partnership aimed at running joint campaigns from large brand advertisers, according to people familiar with the agreement. One source familiar with the deal said the two companies would do many more "tent pole" events integrating Yahoo's content with Facebook's social network, building on the two companies" respective strengths. Facebook and Yahoo declined to comment. Jason Kilar, Hulu's chief executive, meanwhile has ruled himself out of the running to replace Mr Thompson, leaving Ross Levinsohn, Yahoo's interim chief executive, as the frontrunner to assume the permanent role. Following news reports on Thursday that Mr Kilar was being considered, Hulu issued a statement on Friday. "As has been reported, Jason Kilar has been a focus of the Yahoo CEO search committee," Hulu said. He has graciously declined to be considered. The lawsuit Yahoo filed in March alleged that Facebook was "free-riding" on Yahoo's intellectual property and claimed that a majority of its advertising revenues, which totalled $3.1bn last year, were "dependent on technology owned by Yahoo." The suit, brought just months before the social network's stock market debut, claimed Facebook had violated 10 of patents covering social networking, privacy, and advertising. Facebook responded with equal vigour, calling the lawsuit "puzzling" and issuing statements that highlighted the benefits Yahoo had drawn from Facebook's social network effects. "While we are asserting patent claims of our own, we do so in response to Yahoo's short-sighted decision to attack one of its partners and prioritise litigation over innovation," said Ted Ullyot, Facebook's general counsel, in a statement in April. At the time, sources told the FT that the suit was an effort by Mr Thompson to find cash in all corners of Yahoo's business. The avoidance of a protracted legal battle removes a significant uncertainty that had been hanging over Yahoo but the outcome would be a great disappointment to Mr Thompson, who had sought damages in the form of shares in Facebook ahead of its initial public offering. After the IPO was botched, however, Facebook shares have traded well below the $38 issue price, and were at about $31.47 in New York on Friday. Microsoft, another Facebook partner, was paid $550m by the social network in April for rights to 650 patents the software company bought from AOL. A more conciliatory approach was instigated by interim Yahoo boss Ross Levinsohn, who is seen as a contender for the permanent chief executive position, and the group's recently reshuffled board. Facebook has been seen as one of Yahoo's biggest rivals in the online display advertising market. Yahoo's display revenues, after paying costs to other websites for traffic, dropped by 4 per cent to $454m in the first quarter of the year. Facebook reported $872m in advertising revenues for the same period, without breaking out similar costs. Yahoo's lawsuit was very unpopular among engineers at both companies, according to several people familiar with internal reactions. Engineers generally are displeased with the litigious use of patents in Silicon Valley and want to see their discoveries used to build and improve technology, not wage an intellectual property war. Shares in both Facebook and Yahoo were flat to slightly down immediately after news of Friday's deal was broken by AllThingsD, ahead of a 1.5 per cent drop in the Nasdaq Composite.