Why Facebook Bought $550M Of AOL Patents From Microsoft

“Today’s agreement with Microsoft represents an important acquisition for Facebook…This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”

—Ted Ullyot, Facebook’s general counsel.

The company announced that it was purchasing 650 various software patents for a cool $550 million in cash from Microsoft today, which had in turn just purchased those very patents, plus hundreds more, from AOL. Each deal was done with a perpetual license granted to the seller, meaning that now Facebook, Microsoft and AOL all have the rights to the same group of 650 patents—TPM’s Carl Franzen looks at the “Why?” of this deal, which sets up a three-way sharing of intellectual property that is in essence, a legalistic version of the old cold-war “mutually assured destruction paradigm.”