Microsoft, AOL Ink $1.1 Billion Patent Deal

Paul Lilly

AOL today entered into a definitive agreement to sell more than 800 patents outright to Microsoft and grant an additional 300 non-exclusive patents and patent applications to the Redmond software giant for $1.056 billion. A "significant" portion of the money raised will go to shareholders, AOL announced.

The 300 patents and patent applications that remain in AOL's portfolio span core and strategic technologies, such as advertising, search, content generation/management, social networking, mapping, multimedia/streaming, and security, plus a whole bunch more. And while AOL's portfolio is 800 patents lighter (and it's wallet nearly $1.1 billion heavier), part of the transaction includes AOL receiving a license from Microsoft for the transferred patents.

"The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio," said Tim Armstrong , AOL's Chairman and CEO. "We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value."

Investors responded positively to AOL's patent sale by pumping the company's stock price by as much 39 percent to $25.63 in pre-market trading. It's currently up by more than 31 percent at $24.19 before the market opens. Microsoft, meanwhile, is down 0.82 percent to $31.26 in pre-market trading.

Image Credit: Flickr (lazzarello)

Around the web