Microsoft and AOL Strike One Billion Dollar Patent Deal

Patent battles are raging and all big tech companies are in a race to grab as big a patent portfolio as they can to keep themselves safe from patent trolls and lawsuits. A company may be forced to stop sales of infringing products or pay penalizing licensing fees if it is proved in a court of law that its products infringe on patents owned by another company. Recently Google bought Motorola and the biggest reason for purchase of Motorola was its huge patent portfolio which Google intends to use in defense of its mobile OS named Android. Keeping in line with the trend, Microsoft has also announced a deal with AOL to acquire its 800 patents for a price of $1.3 billion. The deal also grants Microsoft the right to another 300 patents of AOL as a licensee. The whole deal is scheduled to be finalized by end 2012. AOL was one of the earliest companies that innovated in the internet era of communication but how valid these patents are in today’s era remains to be analyzed.

Most of the 800 patents that Microsoft is acquiring are related to online communication and internet messaging. Some other patents are related to search algorithms and search engine rankings. Some VOIP patents are also included in this portfolio. A few of the patents are related to video calling and video conferencing. AOL has rated these patents as carrying very high value and termed these as a “beach front property in East Hampton” but some critics have pointed out that AOL is not the leader in innovation and the patents might not be as valuable as AOL has said. Microsoft has said in a formal statement that it has achieved the objective of complementing of its existing portfolio of patents.

Google and Facebook are among the companies that have bought huge patent portfolios. Google bought Motorola Mobility for a price of $12.5 billion in August 2011. It was estimated that around half of that price was paid for 17,0000 patents that Motorola Mobility owns. Similarly Facebook also bought some 750 patents from IBM recently to strengthen its weak patent portfolio. But Microsoft also has got its challenges in courts. Microsoft will appear in a court case in Germany on 17th April brought against it by Motorola, who alleges that Microsoft has infringed on its patents related to video compression. Fearing a shipment ban, Microsoft has already moved its distribution of Windows and Xbox360 to Netherlands.

Author: usmantech