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Microsoft and Facebook have announced an agreement that will see Mark Zuckerberg's social networking behemoth purchase a portion of the patent portfolio Microsoft recently acquired from AOL.
On Apr. 9, AOL announced that it would sell over 800 patents to Microsoft and grant the software giant a nonexclusive license to 300 more, for a price of $1.056 billion in cash. Now, Microsoft says that it purchased 925 AOL patents and patent applications outright and that a majority of these will move to Facebook. Mark Zuckerberg and company will pay Redmond $550 million for about 650 patents and patent applications as well as a license for the AOL patents that Microsoft will retain and own.
"Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction,” read a canned statement from Brad Smith, Microsoft executive vice president and general counsel. "We had submitted the winning AOL bid in order to obtain a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio."
Microsoft declined to discuss the deal further, and Facebook did not respond to a request for comment. It's unclear what technologies are covered by the patents moving to Facebook -- or those staying with Microsoft. But presumably, Microsoft has acquired and will retain the patents covering AOL's Netscape browser.
Today's announcement is part of ongoing battle among the world's tech giants to beef up their patent portfolios, as they seek to defend themselves from litigation -- or actually go on the offensive with patents in hand. Last year, for instance, Microsoft was part of a consortium that purchased more than 6,000 patents from bankrupt Canadian telecom Nortel for $4.5 billion, snatching them from arch-rival Google, and the Redmond software giant is not above asserting its patents, filing suits against Android device makers Motorola Mobility and Barnes & Noble and GPS navigator outfit TomTom while pressuring many others into patent licensing deals.
Meanwhile, Facebook is facing a lawsuit from web rival Yahoo, which has asserted 10 patents covering such technologies as personalized advertising, customized portal pages and news feeds, and messaging applications. Three weeks later, after Yahoo filed suit, Facebook countersued, exerting 10 patents of its own.
Microsoft has a long history of close relations with Facebook. In 2007, Redmond invested $240 million in Facebook, which gave it a 1.6 percent stake the social networking outfit, and though Facebook stopped using Microsoft's display advertising technology in 2010, the social network continues to use Microsoft's Bing search and search ad technologies.
But Microsoft also has a close relationship with Yahoo, the company that is suing Facebook for patent infringement. Bing now powers Yahoo search and search advertising as well.
“Nothing about today’s action changes the fact that Facebook continues to infringe our patents," reads a statement from Yahoo in response to the announcement from Microsoft and Facebook. "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."
In announcing their agreement over the AOL patents, Microsoft and Facebook said that Redmond had purchased 925 U.S. patents and patent applications from AOL as well as a license to AOL’s remaining 300 patents portfolio. This is slightly different from the figures AOL gave earlier this month -- AOL said Redmond had acquired 800 patents and related patent applications -- and it's unclear why the two sets of figures differ.
Update: This story has been updated with a statement from Yahoo.
