Facebook and Microsoft strike US$550m patent deal

23 Apr 2012

Social networking behemoth Facebook is acquiring for US$550m in cash a portion of the patent portfolio software giant Microsoft recently agreed to acquire from AOL Inc.

In the initial AOL auction, Microsoft secured the ability to own or assign about 925 US patents and patent applications, plus a licence to AOL’s remaining patent portfolio, which contains about 300 additional patents that were not for sale.

Under Microsoft’s deal with Facebook, Facebook will own about 650 AOL patents and patent applications, plus a licence to the AOL patents and applications that Microsoft will purchase and own.

Microsoft will retain ownership of about 275 AOL patents and applications; a licence to the about 650 AOL patents and applications that will now be owned by Facebook; and a licence to about 300 patents that AOL did not sell in its auction.

“Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction,” said Brad Smith, executive vice-president and general counsel, Microsoft.

“As we said earlier this month, we had submitted the winning AOL bid in order to obtain a durable licence to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

Ted Ullyot, general counsel, Facebook, said the agreement with Microsoft is an important acquisition for Facebook.

“This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term,” Ullyot said.

The transactions are subject to customary closing conditions.

Tina Costanza was a journalist and sub-editor at Silicon Republic