Précis – Tech companies recognise the increasing value held in patents as Microsoft becomes the latest group to acquire a portfolio of patents from AOL.
What? AOL has sold a portfolio of more than 800 technology patents via a competitive auction to Microsoft in a deal worth $1.1 billion. Under the terms of the deal, Microsoft will grant back to AOL a licence to the sold patents.
For struggling AOL, the sale offers a large cash sum which will hopefully appease critical shareholders.
So what? In addition to competing for market share and profits, it appears that the new trend by technologies companies is competing to accumulate patents, as they recognise the value lies not only in licensing patents but in enabling them to be used in challenging and defending expensive litigation suits.
Microsoft’s deal with AOL is not hugely surprising, given that its major competitor, Google, paid $12.5 billion for Motorola Mobility last year mainly for the mobile company’s patents.
Whilst the parties have not disclosed which patents have been sold, AOL was an early innovator during the development of email and instant messaging technology, and as such it is likely the deal will present Microsoft with control of some of the most fundamental technology patents. In a statement, Microsoft said that this was a “valuable portfolio” which it had been following for some time.
But, this was not the end of the deal...
Within a matter of weeks of striking this deal, Microsoft has announced that it has agreed to sell most of the AOL patents to Facebook. Facebook will pay $550 million in cash for approximately 650 of the patents, and will obtain a licence to the remaining AOL patents. For Microsoft, this deal means that it can recoup some of the cost incurred for the AOL patents and yet retain control of those patents it considers to be of most value to its future.
At the start of the year Facebook had 56 patents, but following the threat of litigation from Yahoo last month it appears to have gone on a spending spree for patents and now holds a portfolio exceeding 1400 patents.
It is unlikely that this is the end in the battle for patents either...