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Facebook Buys $550M Worth of AOL Patents Off Microsoft

A quick turnover for Microsoft considering its deal with AOL hasn’t closed yet

Facebook and Microsoft said Monday on Facebook's web site that Facebook is buying the lion's share of the 925 US patents and patent applications that Microsoft just bought from AOL for $1.06 billion.

Facebook - and Microsoft has an investment in Facebook - is buying 650 of patents off of Microsoft for $550 million cash.

A quick turnover for Microsoft considering its deal with AOL hasn't closed yet and the whole megillah needs regulatory approval. In fact, Microsoft's general counsel Brad Smith remarked in a prepared statement that "Today's agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction. As we said earlier this month, 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."

Bloomberg sources said last week that Facebook had lost the AOL patent auction, such as it was, to Microsoft and that Microsoft would resell most of the trove because it wasn't essential to its own position. Facebook, given its initial interest, was considered a likely receptacle.

Facebook also gets a license to the 275 AOL patents that Microsoft continues to own. What it's not getting is a license to the 300 patents that AOL still has. Microsoft has a license to those but it's not a pass-along.

Microsoft of course gets a license to the patents Facebook is buying off of it.

The deal gives Facebook a stronger patent position against comers like Microsoft's search and advertising partner Yahoo, which is suing Facebook for patent infringement and Facebook is countersuing.

Facebook, which had no known patent position to speak of until recently, bought 750 patents from IBM and with the 650 AOL patents and 60 of its own it now has an arsenal of around 1,460 presumably prime patents.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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