Microsoft, AOL enter $1bn patents deal

Microsoft is to acquire more than 800 of AOL’s patents in an agreement worth $1.06bn (£668m).

The computing giant will also be granted licensing rights to a further 300 of the internet firm’s patents following the completion of the deal.

“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” said the AOL chief executive Tim Armstrong.

Patent lawsuits are rife in the technology industry at present. Microsoft is batting a sales injunction brought about by Motorola Mobility, which could see its products banned in various territories.

The Windows firm is thought to have entered the AOL deal to boost its chances of warding off similar lawsuits in the future. Companies including Intel, Google and Facebook recently bolstered their patent libraries in a bid to do the same.

“This is a valuable portfolio that we have been following for years and analysing in detail for several months,” said Microsoft’s executive vice of legal affairs Brad Smith.

AOL pledged to hand over a “significant portion” of the revenue from the contract to its shareholders. Its shares rose more than 40% following today’s announcement.

Microsoft and AOL are expected to complete the deal by the end of 2012.