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Microsoft Buys 800 AOL Patents For $1 Billion

Posted by samzenpus on from the all-your-patents-are-belong-to-us dept.

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.'"

32 of 103 comments (clear)

  1. First "Me too"? by Chas · · Score: 4, Funny

    Do they cover 'leet? Follow-up posting with naught but "me too"? Or do they cover burying the public in excessive copies of useless physical media?

    --


    Chas - The one, the only.
    THANK GOD!!!
    1. Re:First "Me too"? by Kurrel · · Score: 2

      I always took the swaths of free mailed coasters as a sign that my friends and I should drink more.

    2. Re:First "Me too"? by TheRaven64 · · Score: 2

      Or do they cover burying the public in excessive copies of useless physical media?

      I used to call Compuserve and AOL's free number every couple of weeks to get them to send me a trial. It came on 2-3 floppy disks. Stick a new label on them, reformat, and they work well. I don't think I ever had to buy new floppy disks.

      --
      I am TheRaven on Soylent News
  2. Bullshit by Anonymous Coward · · Score: 5, Funny

    "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."
    Congrats, i think you just made it possible to win bullshit bingo with a single sentence!

    1. Re:Bullshit by gtall · · Score: 4, Funny

      I was hoping for "synergistic" and "focus like a laser" to show up. Unless I hear those terms, the company just isn't a serious player in BB.

  3. Come on, now by HBI · · Score: 5, Insightful

    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?

    --
    HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
    1. Re:Come on, now by TWX · · Score: 4, Informative

      Because of the way it was phrased. Arguably, a company with almost no cash and no interest in certain markets but holding patents in those markets could either become a patent troll, or could sell patents and get cash to allow for some kind of possible technological revival.

      Would you rather see AOL become the next Rambus?

      Personally I wouldn't be surprised if AOL slowly evolves into an e-mail portal for those who have had an address with them and are willing to pay $20 per year to keep that address, but they might be able to make something with the cash, if they're not horrifically stupid.

      --
      Do not look into laser with remaining eye.
    2. Re:Come on, now by HBI · · Score: 5, Insightful

      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.

      --
      HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
    3. Re:Come on, now by 19thNervousBreakdown · · Score: 4, Insightful

      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.

      --
      <xml><I><am><so><damn>Web 2.0</damn></so></am></I></xml>
    4. Re:Come on, now by wisnoskij · · Score: 5, Insightful

      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.

      --
      Troll is not a replacement for I disagree.
    5. Re:Come on, now by Sir_Sri · · Score: 5, Interesting

      It matters what they're worth to the holder. AOL may not have been able to convert those patents into revenue other than by selling the patent outright (and obviously licencing some), whereas microsoft wasn't going to sell a product without the patent covering it. In that case the patents are worth different things to different people. MS may be able to add value, charge more, or make a new product, and being microsoft they will get more sales than if AOL did it.

      Account also gets messy, because microsoft has 57 billion dollars cash on hand, or, I guess, 56 now. But with the government bond market paying next to nothing they're losing ~500 million a year to inflation, which is also close to nothing, but still more than MS is getting from sitting on the cash means they're losing PPP value. They *could* pay that to investors instead (dividends basically), but then they'd lose a chunk to tax etc. Part of the 'cost' to microsoft is what else where they doing with that money, what would it be worth next quarter/year.

      Right now MS is probably getting 1% return on that cash pile, if they can get 2% on these patents from AOL that's a significantly better deal for them. And if it turns out to be a bad idea they have another 56 billion dollars waiting around, just in case.

    6. Re:Come on, now by Bengie · · Score: 2

      They sold some, they licensed some. If they couldn't make use of some patents that MS really wanted, then selling them was a good strategy. "We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft"

    7. Re:Come on, now by alen · · Score: 3, Interesting

      AOL is a huge blog aggregator now. Engadget, HuffPo, Patch and hundreds of others. the days of the indie blogger are over

    8. Re:Come on, now by KhabaLox · · Score: 3, Insightful

      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.

      --
      Ceci n'est pas un sig.
  4. WOW AOL is still alive by Isaac-1 · · Score: 5, Funny

    Raise your hand if you knew AOL was still around?

    1. Re:WOW AOL is still alive by Lumbre · · Score: 2

      *Raises hand* My spam/special offer email goes to an aol address.

    2. Re:WOW AOL is still alive by Anonymous Coward · · Score: 5, Informative

      Huffington Post, TechCrunch, Moviefone, MapQuest, Joystiq, Engadget

    3. Re:WOW AOL is still alive by synapse7 · · Score: 2

      I thought I had to subscribe to AOL to get email.

  5. In the end by daktari · · Score: 5, Funny

    We, as small time tech entrepreneurs, will be able to rest assured that we shall only be sued by either Apple, Microsoft or Google (or a combination of these). That should simplify matters.

    --
    A fool sees not the same tree that a wise man sees. -- Willam Blake
    1. Re:In the end by jellomizer · · Score: 2

      Actually as a small time tech entrepreneur that is good news.
      Because for the most part you can normally the terms of patent use negotiable. And for big companies like that they will often only notice you if you become a threat and big enough to take the hit, however like most companies they either trade patent rights or license use of their patents, and go one back to normal. Vs. the Small Troll who may be scouring the internet and hit you when you are small.

      Also the big three are always looking for small business partners so you can normally make a deal.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
  6. Treading water... by tnk1 · · Score: 2

    Let's see, does this mean the GIF patent goes to Microsoft? Hmm.

    It was a good business move for AOL, but this does look like someone one does to stave off shuttering the HQ. They still have a significant advertising business, and some other properties, but AOL itself is definitely still on the slow slide.

    I'm actually interested that the value is going to the shareholders, instead of being reinvested in the company. Usually, dividends and cash heading back to investors is a sign of a stable business, and is a good thing, but AOL is far from that at the moment. That means it is a play to keep the share price up. There are good reasons to keep the share price up as well, but it probably does not mean any significant change in their fortunes.

    1. Re:Treading water... by Anonymous Coward · · Score: 2, Informative

      Let's see, does this mean the GIF patent goes to Microsoft?

      The GIF patent is expired, and has been for about 9 years...

  7. BINGO! by xxxJonBoyxxx · · Score: 3, Funny

    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.

    BINGO!

  8. Wow by jcreus · · Score: 4, Informative

    Simple maths: 1000000000 / 800 = 1 250 000 USD per patent. Pretty amazing.

  9. What's in there? by Rinisari · · Score: 2

    Is there a list of what patents were transferred?

    --
    Colin Dean Go a year without DRM
  10. 1980's: Merger Mania! 2010's: Patent Mania! by PolygamousRanchKid+ · · Score: 5, Insightful

    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.

    --
    Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
  11. Patents expire by tepples · · Score: 4, Interesting

    Unlike copyrights, patents expire. Patents on behavior seen in 1993, when AOL first connected to Usenet, are due to run out very soon.

  12. AOL patents on networked systems by maroberts · · Score: 4, Insightful

    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.

    --

    Donte Alistair Anderson Roberts - hi son!
    Karma: Chameleon

  13. Re:Microsoft got... by TaoPhoenix · · Score: 4, Insightful

    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.

    --
    My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
  14. Re:1980's: Merger Mania! 2010's: Patent Mania! by excelsior_gr · · Score: 2

    Nice utopia that you describe there. Thing is, the inventor with the smaller purse will just sell his patent for peanuts to the other party, because he/she can't afford a long court struggle that will suck up all his capital and all hopes for implementing his/her invention with it.

    If I come up with something brilliant and truly innovative I won't tell a soul about it. If the novelty is about something in the production process that will not show in the final product (or only its effects will show), then it will be implemented and guarded as a trade secret under lock and key. If the novelty is about a product feature, I would secretly produce as many units as possible and file for a patent the moment the product hits the market. In this way, even if the novelty is thought to be infringing by a patent troll, the units will already be out making money and the competition will have a run for theirs. If they sue and I win (now backed up with the cash coming from the selling products) then it's all good. If I lose, I give the earnings to the competition, spit in their direction and file for bankruptcy and no harm done.

  15. Translation by AtomicDevice · · Score: 2

    AOL's CEO today said at a press release: "Although no one uses any of the products or services we provide anymore, we're still able to leech off of a broken patent system to make a huge amount of money for me."

    --
    Ze Atomic Device! It iz Ztolen!
  16. How's about some Yankee Innovation???? by sgt_doom · · Score: 3, Insightful

    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????