AOL Announces Huge Patent Deal with Microsoft

AOL announced plans to sell more than 800 patents to Microsoft in a $1.056 billion deal giving the struggling Internet pioneer a needed cash injection as it seeks to fend off pressure from shareholders. The deal also provides Microsoft (IW 500/16)?with licenses to more than 300 additional patents and patent applications, AOL said in a statement. AOL chief executive Tim Armstrong said the deal "unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value." Microsoft general counsel Brad Smith said in the statement that the software giant is getting "a valuable portfolio that we have been following for years and analyzing in detail for several months." He said Microsoft "was able to achieve our two primary goals: obtaining a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio." ?AOL said that after the deal is complete, it 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. The patent sale includes stock in an AOL subsidiary on which AOL expects to record a loss for tax purposes and as a result, AOL will offset most taxes in the deal.

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