The news coverage on AOL's $1.1B sale and licensing agreement with Microsoft continues. Most of that coverage attempts to place the agreement in context with a litany of patent transactions. However, what appears to be missing is a cohesive story on what to expect next. With that caveat, here are some links to that news coverage and my comment on what may be next for Microsoft:
Microsoft's AOL Deal Intensifies Patent Wars - New York Times
Microsoft fires latest salvo in patent war with $1 billion purchase from AOL - Washington Post
Microsoft deal with AOL part of patent scramble - BusinessWeek
Microsoft to snag over 800 patents from AOL - CBS News
Insight into AOL's Patent Portfolio - Envision IP
The last article published prior to the AOL sale gives the subject matter of the patents, but not the patent numbers. It would be nice to see how the purchased patents and licensed patents fall into the categories. This is not an academic exercise as purchased patents will translate into standing to sue for patent infringement, while non-exclusive licensed patents will not.
One may wonder why Microsoft, owning over 20,000 US patents, is willing to spend $1.1B to own 800 additional patents and obtain a non-exclusive license to 300 patent. Based on Microsoft's strategy to build a "bridge to collaborate" with other firms as described in Marshall Phelps and David Kline's Burning the Ships - Intellectual Property and the Transformation of Microsoft it appears Microsoft plans to (1) monetize the patents (e.g. sell or license), and/or (2) use the patents as leverage to get cross-licenses or non-assertion agreements from other software and Internet companies. For stronger firms such as Microsoft, this patent deal appears to be an exercise of option (2) to obtain freedom of operation. For weaker firms such as AOL, this patent deal appears to be an exercise of option (1) which is in essence giving up their patent portfolios to survive. The final outcome looks like a consolidation around the major IT companies.
Copyright © 2012 Robert Moll. All rights reserved.
