AOL and Microsoft in $1Billion Patent deal

AOL Inc. (NYSE: AOL) (the "Company") today announced that the Company has entered into a definitive agreement to sell over 800 of its patents and their related patent applications to Microsoft Corporation (NASDAQ: MSFT) ("Microsoft") and to grant Microsoft a non-exclusive license to its retained patent portfolio for aggregate proceeds of $1.056 billion in cash.

Following the sale, AOL will continue to hold a significant patent portfolio of over 300 patents and patent applications spanning core and strategic technologies, including advertising, search, content generation/management, social networking, mapping, multimedia/streaming, and security among others. AOL also received a license to the patents being sold to Microsoft.

And just what is Microsoft gaining.

From Analyzing Microsoft’s Patent Play With AOL.

Envision IP, a firm that analyzed AOL’s patent portfolio late last month, says the bulk of the patents Microsoft is buying or licensing cover things like online communications and messaging. This could include technology for email, instant messaging and “in-network” messaging, such as how on Facebook you can send messages to other Facebook users, and those messages look like emails but aren’t, says Maulin Shah, the firm’s managing director.

Other AOL patents cover technology around the Web browser interfaces and search results, such as ranking search listings, Shah says. The company also has patents around the Internet telephony technology known as VOIP, or voice over Internet protocol, as well as video conferencing and other video-calling functions.