Microsoft shows patent-war newcomers how it's done with AOL deal

Microsoft shows patent-war newcomers how it's done with AOL deal

Summary: In one smooth move, Microsoft is pocketing $550 million by selling hundreds of patents it bought from AOL to Facebook.

TOPICS: Legal, Microsoft

A week ago, Microsoft bought more than 900 patents from AOL for a billion dollars. On April 23, the Softies turned around and sold to Facebook more than 600 of those patents -- and recouped $550 million in the process.

That, young patent-war whippersnappers, is how it's done.

They say the more you do something -- anything -- the better you ultimately get at it. Microsoft has been in the business of buying, selling and threatening others using its patent war chest as its defense. The company's latest patent transaction shows you what you get when you have thousands of lawyers on your payroll.

Today's move didn't come out of the blue. A week ago, Bloomberg reported that Facebook had been eyeing the AOL patents in question. Bloomberg also noted that Microsoft might even end up selling some of the AOL patents it acquired to Facebook.

Many had assumed that Google might be the one most interested in AOL's patent war chest, especially since Netscape -- which AOL acquired way back in 1998 -- was part of the set of properties AOL was selling. If you're in the browser business, like Microsoft or Google, wouldn't you want to own as many browser-related patents as possible? But reported that Google ended up not bidding for AOL's patents in the end.

The most interesting piece here, at least to this Microsoft watcher, is which of AOL's patents Microsoft kept. That's not something the Redmondians are sharing. But did dissect what kinds of patents were likely part of the original group of 925, and found some interesting gems in there.

Any guesses as to what Microsoft wanted with the original AOL patent portfolio? Do you think Microsoft's original plan was to flip half of the bunch to Facebook -- possibly to help Facebook arm itself against Yahoo (which just happens to also be a key Microsoft partner in the search area)?

Topics: Legal, Microsoft


Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • MSFT: Once a tech company, now a law firm


    MS is attacking android with patents like "adding a new number to your contacts with one click".
    Has beens.
    • Wrong!

      They're 80% tech company and 20% law firm.
  • Intellectual property mutually assured destruction ahead

    So now Apple, Facebook, Google (especially assuming the Motorola Mobility acquisition closes), Microsoft, and Oracle all have the intellectual property equivalent of nuclear weapons; how do you expect them to successfully leverage their respective patent collections, beyond creating a lucrative full-employment act for IP lawyers?
  • ????

    I'm missing something.

    1. How is buying and selling at a loss a good thing? Could they have used what they needed in a week in some way and then sell it on or something?

    2. Why arm Facebook against your search partner Yahoo!?

    Thanks in advance
    • ????

      I think you are missing something.

      1. Microsoft did not buy patents and then sell them at a loss- they recouped over half what they paid and kept the patents they wanted, plus the license to use the patents they sold to Facebook- seems pretty savvy to me.

      2. Yahoo is not as tight a partner with Microsoft as Facebook is- Yahoo is using Bing to power their searches, but it's still called "Yahoo search"- Facebook is a tight partner of Microsoft and also uses Bing to power their search engine. Facebook also uses Microsoft Office functionality on its site. Approximately 12% of internet time worldwide is spent on Facebook, how much share does Yahoo have? I'm not sure, but I doubt it's 12%. Facebook has 901 million users, 500 million of whom are logged into Facebook at any given hour of the day- 300 million photos are uploaded to Facebook every day. I'm sure Yahoo doesn't have those numbers. Yahoo has sued Facebook and Facebook has in turn counter-sued Yahoo. Facebook is steadily growing, Yahoo is steadily shrinking, so perhaps Microsoft is smart enough to know which partnership will be most profitable to it, and wise enough to not hurt a rising star in the internet space, thus possibly losing their partnership with Facebook to, perhaps, Google.
      • Unrelated but

        Has something changed, possibly with respect to Facebook, with how Bing generates its search results in the very recent past? For about two years (probably even less), I have found Bing to be [i]somewhat[/i] superior to Google. However, for the last six weeks or so, Bing has been [i]absolutely crushing[/i] Google. Like, no contest. Like, I actually find it somewhat alarming because I can completely misspell something and get facts of the search wrong and Bing pulls it up as the first link while it is nowhere on the first 5 pages of Google. It is akin to mind-reading.

        Is this "social search" in action?
        x I'm tc