Facebook expands arsenal with 650 patents from Microsoft, license to hundreds more

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By Brittany Darwell Comment

Facebook will purchase about 650 former-AOL patents from Microsoft for about $550 million, the company announced today.

Microsoft took over 925 U.S. patents and patent applications from AOL earlier this month, along with a license to about 300 additional patents that weren’t for sale. Now Facebook will take ownership of a majority of those patents and retain a license for the remainder of the portfolio. These patents could aid Facebook in two infringement suits it is currently engaged in with Yahoo, and could protect the company from future intellectual property disputes.

Facebook did not provide details on which patents it acquired from Microsoft, but they are likely related to social networking, messaging, advertising, privacy and customization, which are the key areas Yahoo is targeting in its lawsuit against Facebook. The social network is also involved in a counter-suit against the portal company.

Building an arsenal of patents could also be useful in preventing litigation with other companies. In March, Facebook bought 750 software and networking patents from IBM for an undisclosed sum. Before that, the social network had only 56 patents and 503 applications in the U.S., according to a regulatory filing.

Yahoo’s attacks raised issues in the tech community about how and when patents should be exercised. Many saw Yahoo’s suit as a cheap shot against a pre-IPO Facebook, not unlike the one Yahoo brought against Google just before it went public. As such, Facebook’s countersuit seemed positioned as a statement about the frivolity of patent litigation. And last week, Twitter promised it would only use patents defensively, unless the company acquires permission from the inventor to legally apply the patents otherwise.

Under the agreement announced today, Microsoft will retain ownership of about 275 AOL patents and applications, a license to the 300 patents AOL did not sell in its auction this month, and a license to the 650 patents and applications Facebook now owns. This is yet another extension of a long partnership between Facebook and Microsoft. The corporation was an early investor and advertising provider for the social network. The companies now offer integrated services through Bing, Skype, Office and other features.