Is Microsoft Already Dumping its AOL Patents?

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Companies are racing to outdo each other in their bids to acquire more patents to use as defense in potential infringement litigation.

The latest is Microsoft (NASDAQ:MSFT), who led from the front to acquire AOL’s (NYSE:AOL) patent portfolio for $1.06 billion. It pipped Facebook to the post, as the social networking company reportedly didn’t make a high enough offer.

As is custom, the buyer of a portfolio generally keeps the gems and then sells off the remainder, which are not likely to be of much use. Microsoft is likely to keep just a few of the 800 odd patents acquired from AOL, and probably sell the rest to Facebook.

David Berten, founder and partner of Global IP Law Group, a Chicago-based law firm, said, “Often in large portfolios the value is concentrated in a smaller subset of patents, so it can be that in a 800-patent portfolio only 20 contain most of the value.”

Facebook has an $8 billion cash war chest and is in the market to bulk up its patent portfolio, a major factor being its lawsuit with Yahoo (NASDAQ:YHOO). Facebook recently acquired ammunition in the form of 750 patents from IBM (NYSE:IBM).

“If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition or results of operations,” Facebook said in a March 27 filing, referring to Yahoo.

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