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AOL Patent Sale Beats Expectations

AOL patents
Sell at a premium price
In Microsoft deal

As previously reported by this blog, in recent weeks estimates of the value of AOL’s patents have ranged from a high of $1 billion  to a low of $290 million.

Ending speculation, 800 patents in the AOL portfolio have been sold to Microsoft for $1.3 million each – a total of just over one billion dollars.

The premium price reflects the increasingly important role of patent rights as both offensive and defensive competitive weapons. One of the largest recent deals was Google’s purchase of Motorola Mobility and its 17,000 patents for $12.5 billion. Assuming that those patents account for half the value of the acquisition, the price for each would average $400,000 – less than a third of what Microsoft paid for the AOL patents, on a per-patent basis.

Last year, Microsoft and Apple joined forces with four other companies to pay $4.5 billion for the 6,000 patents held by the bankrupt Canadian telecom company Nortel – a rate of $750,000 per patent. This was nearly four times the average for computer, software, and telecom patents only a few years earlier.

AOL, an online pioneer now switching its focus from technology to media with its acquisition of The Huffington Post and other publications, sold to Microsoft its early patents that relate to search, email, messaging, and custom ads. The company is retaining ownership of an additional 300 patents.

Microsoft has about 20,000 patents of its own (not counting pending applications) — about four times the stockpile of its rival Apple.

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