According to an AllThingsD report, Yahoo and Facebook have worked out a settlement to end their patent dispute; with the two companies making an official announcement on Friday about a deal under which they will cross-license each other's patents and expand their strategic partnership.

The patent dispute between the two companies began in March when the then Yahoo CEO Scott Thompson accused Facebook of infringement of Yahoo's patents; and Facebook filed a countersuit against Yahoo alleging that the company was after "litigation over innovation."

With Yahoo and Facebook finally managing to settle the patent scuffle, surprisingly, in a very amicable manner, their partnership will include a collaboration of their advertising sales efforts, along with cross-licensing of patents, which means that the two companies will not sue each other over the "shared" patents.

The settlement deal - which did not involve any cash, but can potentially boost the struggling Yahoo's fortunes - underscores Yahoo's interim CEO Ross Levinsohn's relentless efforts to end his company's hostilities with Facebook. After taking over Yahoo on an interim basis in May, Levinsohn got in touch with Facebook's Chief Operating Officer Sheryl Sandberg for negotiations to settle the patent dispute.

Noting that Facebook and Yahoo have resolved their dispute in a "positive manner," and have promised to forge a deep advertising and licensing partnership, Sandberg said that Facebook would "look forward to partnering closely with Ross and the leadership at Yahoo."