Facebook Pays Microsoft $550M in Patent Deal

By Barbara E. Hernandez

| Monday, Apr 23, 2012 | Updated 11:43 AM PDT

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Facebook Pays Microsoft $550M in Patent Deal

Facebook made a $550 million deal to buy 650 former AOL patents from Microsoft.

Facebook announced Monday that it will pay Microsoft $550 million for the majority of patents Microsoft acquired from AOL earlier this month.

From Facebook:

In the initial AOL auction, Microsoft secured the ability to own or assign approximately 925 U.S. patents and patent applications plus a license to AOL’s remaining patent portfolio, which contains approximately 300 additional patents that were not for sale. . . . As a result of today’s agreement, Facebook will obtain ownership of approximately 650 AOL patents and patent applications, plus a license to the AOL patents and applications that Microsoft will purchase and own.

Microsoft will keep 275 of the patents outright and also have a license to the 650 now owned by Facebook. All in all, a pretty sweet deal for Microsoft -- which has made more than half of the $1 billion it paid AOL for the patents.

“Today’s agreement with Microsoft represents an important acquisition for Facebook,” Ted Ullyot, general counsel for Facebook said in a statement. “This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”

With the purchase, Facebook now has security against lawsuits from tech companies (such as Yahoo) and that's likely worth the $550 million.