Microsoft and Facebook strike deal over AOL patents

Facebook will buy a portion of the more than 900 patents Microsoft acquired from AOL recently

Microsoft and Facebook, which have struck a variety of business, technology and advertising agreements in recent years, announced on Monday a deal related to patents AOL recently sold.

As part of the deal, Facebook has agreed to buy a portion of the patents Microsoft recently acquired from AOL. Facebook will pay Microsoft US$550 million in cash for around 650 AOL patents and patent applications, plus a license to the AOL patents and patent applications Microsoft will buy.

Earlier this month, Microsoft agreed to pay $1.06 billion in cash to own or assign around 925 AOL patents and obtain a nonexclusive license to more than 300 patents AOL is retaining.

Areas covered by the patents in question include online advertising, search, content generation and management, social networking, mapping, multimedia and streaming, and security.

When the Facebook deal closes, Microsoft will own around 275 AOL patents and patent applications, a license to the 650 Facebook will own and a license to the around 300 patents AOL retained.

Microsoft's deal with Facebook allows Microsoft to recover more than half of what it spent in the AOL deal, while achieving its goals, Microsoft's General Counsel Brad Smith said in a statement.

Smith's counterpart at Facebook, Ted Ullyot, said in the statement that this deal is another step in the company's process to build a patent portfolio.

Facebook and Microsoft partner in a variety of areas, as they battle common foe Google in markets including social networking, search, online advertising, mobile and cloud applications.

It has become popular among large IT vendors to spend considerable amounts of money bulking up their patent holdings as proactively defensive measures against possible intellectual property lawsuits.

In Facebook's case, it is currently facing such a lawsuit from Yahoo, which alleges Facebook has infringed in 10 of its patents. The lawsuit, filed in March, states that the infringed-upon patents cover areas like online advertising. Weeks later Facebook fired back with a patent-infringement counter-suit against Yahoo.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

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