Microsofts Buys 800 Patents from AOL for $1 Billion

By Joseph Mandour on April 19, 2012

microsoft-200x132 Los Angeles – The flailing Internet service provider America Online (AOL Inc.) has sold approximately 800 technology patents to Microsoft at a recent patent auction. Patent fire sales are becoming more and more popular as floundering companies try to raise the funds to stay afloat and for financially sound companies to increase their market share and earn licensing royalties.

Microsoft would not comment on what technology the patents cover, however technology analysts believe they relate to Internet technology, including advertising, search, and mapping. If that is the case with the patents purchased from AOL, Microsoft will have a chance at competing with Google, which dominates the market in all three areas.

“There is a fight for market share occurring on multiple fronts – technology, patents, and advertising,” stated Colin Gillis, an analyst with BGC Partners, who covers Microsoft. “Microsoft, more so than others out there, has been using its patent portfolio as a way to generate license fees. This should strengthen that.”

In recent years, the high-tech industry has become a hot bed for patent sales as well as for messy litigation. Many companies, such as Apple, Microsoft, and Samsung have used their patent artillery for suing their competitors for patent infringement as well as for disputing infringement claims against them by trying to invalidate their competitors patents.

A recent example of this is social networking giant Facebook acquiring 750 patents from IBM, which aided the company in defending itself after being sued for infringing 10 Yahoo patents. With the newly acquired patent portfolio, Facebook was able to respond to Yahoo’s complaint with a counter complaint, accusing Yahoo of violating ten of its patents.

Just after the announcement of the patent sale, AOL’s stock rose $7.98 or 43% per share, to $26.40. The iconic Internet service provider says it plans to pay out a portion of the proceeds as dividends to its shareholders. Once the sale is final, AOL should have about $15 per share of cash on hand.

AOL will still retain more than three hundred patents covering a wide array of technologies, including advertising, search, content generation, social networking, mapping, multimedia, and security.

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Posted in: Patent Registration