This comes shortly after Facebook spent another $1 billion to buy the photo sharing application company Intagram, which according to analysts has no revenue. Facebook, one of the largest social networking companies, bought the patents from Microsoft Corporation (NASDAQ:MSFT). These are the same patents that Microsoft bought less than a month ago from AOL, Inc. (NYSE:AOL) at an estimated value of around $1.1 billion. The initial deal- purchase of the patents from AOL- was considered too high, but it seems that Microsoft Corporation (NASDAQ:MSFT) has now recouped its losses, by earning half of what it had spent in the deal with Facebook.
In the auction with AOL, Inc. (NYSE:AOL), Microsoft Corporation (NASDAQ:MSFT) had gotten the ability to own, and assign around 925 United States patents, and applications, and also licenses to AOL’s patent portfolio which had around 300 patents that had not been put up for sale. The patents that Microsoft got cover a range of online technologies, as well as businesses, multimedia, and even search.
In the deal with Microsoft, Facebook will own around 650 former AOL patents, and it will also license the remaining patents that are owned by Microsoft. However, the rights to the remaining patents will not be relinquished, but will be retained by Microsoft and licensed. So, the software giant will have ownership of around 275 AOL patents. Therefore, in the deal between Facebook and Microsoft, each of the two firms will have the right to use patents that are held by the other firm.
So, upon closure of the deal, Microsoft will have control of 275 patents and applications from AOL, but will also have a license to the 650 AOL patents that will be owned by Facebook; and also have a license to around 300 patents that AOL did not sell. On the other hand, Facebook will have control of 650 AOL patents, and their application, and they will also have a license to the patents from AOL that Microsoft will buy and own.
The agreement between the two was meant to ensure that no party sued the other over the use of the AOL patents. Facebook’s management said that the move was meant to ensure that the interests of the social network giant were protected by creating an intellectual property listing. On the other hand, Microsoft said that with the new deal, they had been able to achieve their goals from the AOL auction, and also recovered a half of the costs that they had incurred buying the AOL patents.
However, it had been rumored that Facebook had been one of the bidders for the AOL patents, but had been beaten to the deal by Microsoft. Therefore, in the new deal with Microsoft, they had been simply looking for a way to also meet their needs of increasing their patent portfolio.
Nonetheless, even with this new deal with Microsoft, Facebook is currently embroiled in a bitter patent lawsuit with Yahoo. Yahoo had filed the suit initially, but Facebook also countersued. But it seems that even with legal troubles; Mark Zuckerberg still finds the time to make new deals, in a bid to strengthen Facebook.