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Microsoft Patent Flip

MS flips patents;
AOL portfolio
Now goes to FB

As previously reported in this blog, Microsoft recently acquired a portfolio of 925 AOL patents (earlier reports said 800) for just over $1 billion.  Microsoft also acquired a license to several hundred additional patents that AOL kept, along with the ability to further sub-license those patent rights.

Now the plot thickens:  less than two weeks later, MS has turned around and sold 70 percent of the AOL patents (about 650) — to Facebook for $550 million in cash, and granted Facebook license rights to 275 AOL patents Microsoft is retaining.

Although Facebook and Microsoft have not yet announced how they’re going to divide up the patents in the AOL portfolio, it’s expected that Facebook will get patents involving mobile and instant messaging while MS will keep AOL search-related patents.

Commentators have suggested that this means Microsoft and Facebook are ganging up on mutual rival Google.

Google’s free online apps compete with Microsoft Office, and Google’s Android operating system competes with Microsoft’s Windows Phone software.  Google Plus is an attempt to compete with Facebook.

The AOL patent deal also provides Facebook with more ammo in its ongoing war with Yahoo.  As we reported here, Yahoo sued Facebook earlier this year for allegedly infringing 285 claims in 10 Yahoo patents.

Facebook subsequently countersued Yahoo for patent infringement.

Yahoo claimed to be undaunted by the AOL-MS-Facebook deal:

Nothing about today’s action changes the fact that Facebook continues to infringe our patents. 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.

Facebook, which had only 56 issued patents at the beginning of 2012, has been on a buying spree in advance of its highly-anticipated IPO.  With its share of  the AOL portfolio, it now has a stockpile of over 1400 patents and patent applications.

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