MICROSOFT IS SELLING PATENTS TO FACEBOOK FOR $550 MILLION

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Photo: AP

Facebook is buying 600 patents from Microsoft for $550 million in cash, the companies just announced.The patents Microsoft is selling come from the $1 billion portfolio of patents it just bought from AOL.

Microsoft is hanging onto to ~275 of the AOL patents, and the rest are going to Facebook.

Facebook, will presumably use those patents to sue the pants off Yahoo.

This is the crazy world we live in now.

Here’s the press release on the news:

Microsoft Corp. and Facebook announced today a definitive agreement under which Microsoft will assign to Facebook the right to purchase a portion of the patent portfolio it recently agreed to acquire from AOL Inc. Facebook has agreed to purchase this portion for $550 million in cash.

In the initial AOL auction, Microsoft secured the ability to own or assign approximately 925 U.S. patents and patent applications plus a licence 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 licence to the AOL patents and applications that Microsoft will purchase and own.

Upon closing of this transaction with Facebook, Microsoft will retain ownership of approximately 275 AOL patents and applications; a licence to the approximately 650 AOL patents and applications that will now be owned by Facebook; and a licence to approximately 300 patents that AOL did not sell in its auction.

“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, Microsoft. “As we said earlier this month, we had submitted the winning AOL bid in order to obtain a durable licence to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

“Today’s agreement with Microsoft represents an important acquisition for Facebook,” said Ted Ullyot, general counsel, 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.”

The parties are evaluating the accounting treatment for these transactions. These transactions are also subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

The news first came via All Things D

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