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Facebook buys $550m patents from Microsoft

Date
Microsoft

Microsoft

Microsoft, which just bought patents from AOL for $US1 billion, is now turning around and selling most of them to Facebook for $US550 million.

Facebook is buying about 650 of the 925 AOL patents and patent applications that Microsoft bought, Microsoft and Facebook said.

Facebook will also get a licence to use the rest of the AOL patents that Microsoft bought. Similarly, Microsoft will get a licence to use the patents Facebook is buying. This part of the arrangement amounts to an agreement between Facebook and Microsoft not to sue each other over any of the AOL patents. The companies are not saying what the patents cover.

Microsoft said the deal enables it to recoup half the cost of the AOL deal while reaching its goals for the purchase. Facebook's general counsel, Ted Ullyot, called the move a "significant step in our ongoing process of building an intellectual property portfolio to protect Facebook's interests over the long term."

Patents have become a valuable commodity for technology companies in recent years, and are frequently used in lawsuits against one another, leading Yammmer CEO David Sacks to dub patent wars an "innovation tax".

Facebook, which is expected to go public in May, is embroiled in a patent suit with struggling internet company Yahoo.

Yahoo had sued Facebook saying the company violates 10 of its patents covering advertising, privacy controls and social networking. Facebook responded with its own lawsuit this month accusing Yahoo of violating 10 of its patents.

The patents from AOL are adding to Facebook's quickly expanding patent portfolio. The company recently acquired 750 patents from IBM covering technologies that deal with software and networking. At the end of 2011, Facebook had just 56 US patents, which was a relatively small number compared with other big tech companies.

Facebook has said it expects to raise $US5 billion in its initial public offering. The actual figure is expected to be higher, however, and could value the Menlo Park, California-based company at as much as $US100 billion.

Facebook's blistering growth rate

How the number of active users at Facebook has grown:

December 2004: 1 million.

December 2005: 5.5 million.

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December 2006: 12 million.

April 2007: 20 million.

October 2007: 50 million.

August 2008: 100 million.

January 2009: 150 million.

February 2009: 175 million.

April 2009: 200 million.

July 2009: 250 million.

September 2009: 300 million.

December 2009: 350 million.

February 2010: 400 million.

July 2010: 500 million.

December 2010: 608 million.

July 2011: 750 million.

September 2011: 800 million.

December 2011: 845 million.

March 2012: 901 million.

AP

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3 comments so far

  • shouldnt this be in the "only in america section"?

    Commenter
    skeptic
    Location
    perth
    Date and time
    April 25, 2012, 8:09AM
    • This is a smart move by Microsoft because when FB falls apart due to it not actually having an original product they will be so desperate for cash they will sell them back to Microsoft for $100m.

      Commenter
      StBob
      Date and time
      April 25, 2012, 10:52AM
      • Well this is good for Facebook and its ongoing partnership with Microsoft as Microsoft only users Facebook as its sole advertising Partner

        Commenter
        jamesianmathews
        Date and time
        April 25, 2012, 4:57PM

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