Facebook Buys $550 M in Former AOL Patents from Microsoft

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ADOTAS – Facebook and Microsoft announced today an agreement by which Facebook may obtain around 650 patents and patent applications from Microsoft, and will also secure the right to license around 275 other patents Microsoft that will continue to hold — patents and applications from a package Microsoft purchased from AOL earlier this month. Facebook is paying Microsoft $550 million for those rights. Microsoft likewise retains a license to those 650-odd patents and applications it’s given Facebook the option to buy. Both companies issued statements about the deal, after it was originally broken earlier today by AllThingsD. This pushes Facebook’s total number of patent holdings to over 1,400, according to estimates from ZDNet.

There’s a fairly complex cloud of parries and swipes preceding today’s announcement. For one thing, Facebook and Microsoft’s Bing search engine have been integrated in certain features for quite some time, a partnership regarded as a strategic stance against the specter of Google search hegemony. For another, Facebook has been bulking up on patents, in a move interpreted as a means of strengthening its intellectual property holdings in advance of its IPO, which has been projected by many insiders for sometime in May — back in March, in fact, Facebook bought about 750 patents from IBM. On Microsoft’s end, on April 9, the tech giant agreed to pay a little over $1 billion to AOL, to own forthright or own the ability to assign 925 AOL-held patents, and a license to about 300 other patents, relating to search, email, instant messaging and advertising technology.

On Facebook’s end, Yahoo sued the network on March 12, claiming patent infringement for 10 patents, most of which pertained to advertising, with the remainder relating to social networking. Facebook then made the aforementioned patent purchase from IBM, and the network countersued Yahoo on April 3. Some reports have suggested today’s Microsoft/Facebook deal is a way for Facebook to cover its bases in its rumble with Yahoo. Yahoo issued a statement today that read, in part, “Companies who purchase patents are often working from a position of weakness and take these actions to strengthen their portfolio. We see today’s announcement as a validation of our case against Facebook.” The tech blogosphere hasn’t been terribly sympathetic to Yahoo, though, while certain reports have commended Microsoft for strengthening its alliance with Facebook, maintaining good relations with AOL (a statement from Microsoft executive vice president and general counsel clarified its patent purchase from AOL happened “in order to obtain a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio”), and avoiding touching Yahoo directly.

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