Microsoft and Facebook have announced a deal in which Facebook will purchase a portion of the patent portfolio that Microsoft bought from AOL earlier this month. Facebook will pay Microsoft $550 million in cash for ownership of approximately 650 AOL patents and patent applications, plus a license to the AOL patents and applications that Microsoft is keeping. That's about half the $1.1 billion Microsoft paid for the patents, and Microsoft will, of course, also maintain license for the patents it is selling to Facebook.
"Today's agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction," said Brad Smith, executive vice president and general counsel for Microsoft. "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."
The deal is just as good for Facebook, which will end up owning a majority of the 952 patents Microsoft bought from AOL. The two companies already have a very close relationship, with Microsoft owning a portion of Facebook, so it makes sense for Microsoft to share its newly acquired patents and their cost.
"Today's agreement with Microsoft represents an important acquisition for Facebook," said Ted Ullyot, general counsel for 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."
There has been some speculation already about what Microsoft wanted from the AOL patent portfolio, but this new twist makes things very interesting. Facebook and Microsoft have essentially split the cost of the patents, which could be worrying for companies such as Google and Apple.
What do you think? Will Facebook and Microsoft use these patents to defend their interests or is this just another step toward a an all-out patent war? Let me know in the comment section below.