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Microsoft, Facebook Announce $550 Mln Patent Deal

Software giant Microsoft Corp. (MSFT: Quote) and social networking giant Facebook on Monday announced a definitive agreement under which Microsoft will assign to Facebook the right to purchase for $550 million in cash a portion of the patent portfolio it recently agreed to acquire from AOL Inc. (AOL).

In the initial AOL auction, Microsoft secured the ability to own or assign approximately 925 U.S. patents and patent applications plus a license to AOL's remaining patent portfolio, which contains about 300 additional patents that were not for sale.

As a result of Monday's deal, Facebook will obtain ownership of about 650 AOL patents and patent applications, plus a license to the AOL patents and applications that Microsoft will purchase and own.

Following the closing of the deal with Facebook, Microsoft will retain ownership of about 275 AOL patents and applications; a license to the about 650 AOL patents and applications that will now be owned by Facebook; and a license to about 300 patents that AOL did not sell in its auction.

The parties are evaluating the accounting treatment for these transactions.

by RTT Staff Writer

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