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Facebook will pay Microsoft $550 million in cash to buy a portion of the AOL patent portfolio that Microsoft recently agreed to acquire.

Two weeks ago Microsoft agreed to pay AOL more than $1 billion for the broader portfolio — reportedly outbidding Facebook in that original auction. However, Facebook and Microsoft are partners, with Microsoft owning a minority stake in the social network, and the deal this morning gives Facebook significant rights to the portfolio that AOL is selling.

Here is the breakdown from a news release announcing the deal this morning.

In the initial AOL auction, Microsoft secured the ability to own or assign approximately 925 U.S. patents and patent applications plus a license to AOL’s remaining patent portfolio, which contains approximately 300 additional patents that were not for sale.As a result of today’s agreement, Facebook will obtain ownership of approximately 650 AOL patents and patent applications, plus a license to the AOL patents and applications that Microsoft will purchase and own.

Upon closing of this transaction with Facebook, Microsoft will retain ownership of approximately 275 AOL patents and applications; a license to the approximately 650 AOL patents and applications that will now be owned by Facebook; and a license to approximately 300 patents that AOL did not sell in its auction.

One reason that Facebook needs to bolster its patent portfolio is because of litigation, such as the suit brought by against the company last month by Yahoo — another of Microsoft’s partners.

Microsoft general counsel Brad Smith says in a news release, “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.”

Facebook general counsel Ted Ullyot calls it “another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”

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