Microsoft and Facebook Agree Deal for AOL Patents

Earlier this month Microsoft agreed a deal to buy 950 patents from AOL and licence a further 300 for a total of $1.1bn (£685). Less than two week later however the Redmond-based company has agreed to sell 650 of these patents to Facebook 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.

In a statement issued by Microsoft, Brad Smith, executive vice president and general counsel, Microsoft said: "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."

"Today's agreement with Microsoft represents an important acquisition for Facebook," said Ted Ullyot, general counsel, Facebook. "This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook's interests over the long term."

Microsoft won a competitive auction to purchase the AOL patents earlier this month, but it had been rumoured at the time that Microsoft would not be holding on to all the patents and that Facebook was one of the interested parties.

It is still unclear as to what exactly the patents are related to, but considering the parties involved, it is safe to say they are related in some way to social media, online search and possibly advertising.

At the time of the sale to Microsoft, AOL said it would be holding on to 300 patent which represent its core and strategic technologies: advertising, search, content generation and management, social networking mapping, multimedia and streaming, security and others.