Microsoft will pay AOL more than $1 billion to buy 800 technology patents and license another 300 from the early Internet leader under a deal announced between the companies this morning.
AOL’s patents include some that outside analysts consider fundamental to core online activities, such as web-based messaging, multimedia and data retrieval. The deal promises to improve Microsoft’s position in the courtroom and at the bargaining table as it goes head-to-head with other tech giants in patent disputes and licensing talks.
Microsoft won the patents in a competitive auction. The other bidders aren’t publicly named.
“This is a valuable portfolio that we have been following for years and analyzing in detail for several months,” said Brad Smith, Microsoft’s general counsel, in the news release announcing the deal.
The companies say the deal should close by the end of the year, pending regulatory approval.
So what exactly is Microsoft getting? “While AOL does not seem to have any patents that could be deemed essential to wireless standards, it certainly owns many technologies that are fundamental to electronic and voice messaging, Internet user experience, multimedia sharing, and web-based data retrieval, technologies that have become common place in today’s online world,” wrote intellectual property researchers EnvisionIP in an earlier analysis of the AOL patents. (Via AllThingsD)
AOL will receive a license back from Microsoft giving it continued rights to the patents it’s selling. The company says it will “return a significant portion of the sale proceeds to shareholders and will determine the most efficient and effective method to do so prior to the closing of the transaction.”
AOL shares are up more than 40 percent. Microsoft shares are down with the broader market.
