Microsoft Buys 800 AOL Patents For $1 Billion

netbuzz writes "Marking the latest escalation in the technology industry's intellectual-property arms race, Microsoft is paying AOL a shade over $1 billion for 800 patents, the cream of which AOL CEO Tim Armstrong has described as 'beachfront property in East Hampton.' Armstrong insists they haven't left the cupboard bare: 'We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value.'"

Comments

Come on, now

[HBI]

These guys insist on insulting our intelligence by stating that they're creating 'long term shareholder value' by selling assets. That's BS. The company is worth less today than it was yesterday, and Microsoft is worth more. How is a statement like that not tortious?

Re:Come on, now

[HBI]

I don't see how Microsoft being the next Rambus is any better than AOL doing it themselves.

Where has AOL been smart over the last 15 years or so? When the market was saturated for free sign-up CDs, that was about the end of AOL's innovation.

Re:Come on, now

[19thNervousBreakdown]

That all depends on whether you think those patents were worth more, less than, or equal to a billion dollars. It's a reasonable assumption that they were either worth less than a billion dollars, or cash on hand is more valuable to AOL than the potential future earnings the patents represent. A cake next week doesn't mean much to somebody who's starving today.

That doesn't, however, discard the alternate possibilities: Microsoft got a shit deal on a bunch of worthless patents and AOL needs the cash now, or Microsoft got a great deal and AOL just sold the only thing that might have saved them for a short-term boost, or anything in between.

The statement isn't tortious because "tort" is not a synonym for "lie" or "doublespeak" or anything of the sort, and even if it was, a bland sales-lingo statement could hardly be misconstrued as anything to base a business decision on. Maybe you took it that way, but if so, I think I'm safe in assuming you don't have the money necessary to actually be harmed by such a claim.

Re:Come on, now

[wisnoskij]

What? Do you have no concept of what is going on here?
Theoretically they just traded 1 billion dollars worth of useless patents that were just gathering dust for 1 billion dollars that they can use for anything.
They are worth today exactly what they were worth yesterday.
What they do with this influx of money will determine if they gain or lose value as a company.

Re:Come on, now

[KhabaLox]

The company is worth less today than it was yesterday, and Microsoft is worth more.

How do you figure? You must be reaching the conclusion that the future value of those patents exceed the present value of $1 billion for AOL. Microsoft reached a similar, but different conclusion that the future value of those patents exceeded the present value of $1 billion for Microsoft. They quoted exec even says that these 800 patents "complement" MS's existing patents, so it's quite possible that both companies are worth more after this transaction. Indeed, that is one of the key underpinnings of transactional economics which you don't seem to understand. Both companies freely entered into the agreement based on the belief that they are better off for it. Now, it's possible that the people who made the decisions are wrong (either through corruption or ineptitude), but I don't think that is likely. It's more likely that AOL realizes that it can put $1 billion to better use (e.g. by expanding it's content empire) than those patents.

Re:Negative Equity

[TWX]

I'm no fan of Microsoft, but they at least make stuff. That is one difference between Microsoft and Patent Trolls.

Admittedly, I don't think a lot of what's patented in software should be able to be patented, but our Patent Office doesn't have the expertise or manpower to deny so many patents that they should deny.

1980's: Merger Mania! 2010's: Patent Mania!

[PolygamousRanchKid]

It really seems now that the Big Game Hunt in town is Patent Barter. Having world class patent attorneys, is more important to a company's long term tech strategy, than having world class researchers.

You can come up with something brilliant, truly innovative on the tech front, but be devastated on the patent front. Thus, rendering your research worthless.

Tech patent attorneys. This decade's Arms Race.

AOL patents on networked systems

[maroberts]

It would not surprise me if AOL had useful patents concerning the design of networked systems to handle their millions of users. They were probably the first to encounter the problems that having potentially 25 million+ users would cause.

Re:Microsoft got...

[TaoPhoenix]

As I peruse the article, especially the updates, I don't think each and every one of those patents was exactly hand picked and of equal worth. My guess is that there's a couple of gems in there and a good deal of padding. Yet unfortunately those gems are probably worth more than the Billion.

AOL got slammed as one of the reasons for "Eternal September" yet that influx of users also helped end the "Revenge of the Nerds" attitude towards computing. They deserved what they had at the time, it was fair money earned. Then of course, the rest of the web caught up and passed them, etc. etc. So then the techies laughed at them for being has-beens.

So what's a "Has-Been" to do? Suppose they have a couple killer patents on something related to chat rooms for example. They'll never regain that former glory, so that patent is useless to them because it would take 30 billion and a marketing genius to do a turn-around. So heck, why not sell that killer patent? Maybe it and the 100 related ones are worth $500 million. Then a little last hour negotiating collected a little more cash by requiring that some lesser patents be bundled in there. MS has the money, so they just shrug, and maybe they don't even begrudge AOL the cash - I don't think I've ever heard of *AOL* threatening Microsoft in any year.

So maybe AOL can do something with the cash if they don't run out of time.

How's about some Yankee Innovation????

[sgt_doom]

Hold it, the USCoC (US Chamber of Commerce) says "we have to innovate" our way out of this depression (or recovery, or WTF they douchetard crooks are calling it now). But Micro$oft is simply buying patents --- where's the innovation??? --- while Nathan Myrvhold's Intellectual Ventures is doing patent trolling and strongarming???? Where's the frigging innovation????