Facebook buys AOL patents for $550 million

Facebook buys AOL patents for $550 million

Seattle : WA : USA | Apr 24, 2012 at 5:26 AM PDT
Views: Pending
Microsoft and AOL Patent Acquisition - Part II

Facebook seems to be really charging ahead this year, clearly establishing its position as an industry leader. Having valued itself at close to a $100 billion in its IPO, the social networking site has gone on to spend its considerable resources as well. This month saw Facebook spending a record sum of $1 billion on acquiring the photo app, Instagram, making its owners quite rich and Facebook’s own portfolio a lot more diverse.

Now Facebook has made another deal. This time, it is buying AOL patents from Microsoft for a reported sum of $550 million. Though the names and details of the patents being bought have not been revealed by either Microsoft or Facebook, it has been speculated by the Wall Street Journal that the 650 patents "relate to digital technologies including email, instant messaging, Web browsing, Web search, online advertising, mobile technology, and e-commerce."

Microsoft, earlier this month, bought close to a thousand patents from AOL for more than $1 billion and now it will be selling 650 of those to the social networking site, in addition to issuing licenses to the company for 275 of them.

Commenting upon the purchase, Facebook general counsel Ted Ullyot said in a release that the deal was “another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook's interests,” according to a Deal Journal blog post. Microsoft general consul Brad Smith said about the deal, “Today's agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction,” according to a report by TechCrunch.

Facebook has been trying to boost its patent portfolio, as being a relatively new company, compared to other established ones like Microsoft and Apple, its own patent library is comparatively slim. When it issued its IPO prospectus towards the end of last year, it only had 56 issued patents and 503 filed patent applications in the US. Since then, in a possible bid to further boost its IPO, for which the date has still not been revealed, the social networking site has been trying to buy as many patents as possible, thanks in a very large part to its significant resources. In March of this year it bought around 750 patents for an undisclosed sum from IBM and then a month later bought Instagram.

Of course, during these buy outs, Facebook has encountered snags with search engine Yahoo. Suing the company for patent infringement, a Yahoo spokeswoman commented, "Nothing about today's action changes the fact that Facebook continues to infringe our patents," according to a report on Reuters.

Facebook’s IPO is expected imminently and though it may have valued itself at close to $100 billion, it is expected that the company will raise around $10 billion from the public offering.

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A visitor looks at Apple patents displayed at the World Intellectual Property Organization headquarters in Geneva
A visitor looks at Apple patents displayed at the World Intellectual Property Organization headquarters in Geneva
arkar is based in Seattle, Washington, United States of America, and is an Anchor on Allvoices.
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