Business, Economics and Jobs

AOL, Microsoft reach $1 billion patent deal


AOL Chairman and CEO Tim Armstrong addresses the audience at the Abu Dhabi Media Summit on March 10, 2010 in Abu Dhabi, United Arab Emirates. AOL's recent patent deal with Microsoft netted Armstrong up to $30 million in profits, according to Forbes.


Jack Dabaghian

AOL and Microsoft have reached a $1 billion patent deal, as Microsoft plans to purchase 800 of AOL's patents and obtain licenses to the remaining 300 or so.

"This is a valuable portfolio that we have been following for years and analyzing in detail for several months," Brad Smith, Microsoft's general counsel, told the Wall Street Journal

AOL will continue to hold over 300 patents including those for advertising, search, social media, and mapping, and will retain a license on the patents it sells to Microsoft, Reuters reported.  

More from GlobalPost: Facebook buys 750 patents from IBM to build defense against Yahoo!

The sale marks the end of AOL's very public search for a buyer, Mashable reported

"The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio," AOL CEO Tim Armstrong, who according to Forbes made $30 million in the deal with his stock options, told the Wall Street Journal. 

The sale is the latest in a string of high-profile patent buyouts among technology companies. In the last year, Google took over Motorola for $12.5 billion; a consortium of companies (including Microsoft) bought 6,000 technologies from the bankrupt Nortel Networks for $4.5 billion; Facebook reportedly purchased 750 patents from IBM; and Eastman Kodak has been reorganizing its' bankruptcy around the planned sale of its 1,100 digital imaging patents, which have an estimated worth of up to $2.6 billion, the New York Times reported

More from GlobalPost: Google buys Motorola: Genius or colossally stupid?

AOL's stock jumped after news of Microsoft's purchase, and shares were up 37 percent to $25.16 in trading before the Market opened on Monday, Reuters reported. The company closed at $18.42 on Friday. 

The deal is expected to be completed by the end of 2012, and AOL has said it plans to turn most of the $1.056 billion sale price over to its shareholders, Mashable reported.