AOL is to sell more than 800 technology patents and related applications to Microsoft for about $1.06bn, as the embattled online giant looks to return cash to investors.
The move marks the latest episode in an increasingly expensive battle for intellectual property, with the likes of Google, Apple, Facebook and Yahoo also tussling for the rights to provide the best technology to their customers.
Google has struck the biggest deal so far, announcing plans to buy Motorola Mobility for $12.5 billion last year, largely for its portfolio of mobile patents.
Samsung and Apple are engaged in a battle in courts around the world over who owns what patents relating to Apple’s iPhone 4S, iPad and Samsung’s Galaxy Nexus.
AOL said it would return a “significant portion” of the sale proceeds to shareholders.
“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” said the chief executive, Tim Armstrong.
The transaction lets New York-based AOL generate further funds amid slow advertising growth and a decline in its dial-up internet subscribers. Company revenue is down 29 per cent since its spin-off from Time Warner in late 2009.
Patents are becoming increasingly hot properties as companies battle over the technology underpinning smartphones, social networks and tablet computers.
AOL, which will hold more than 300 patents and patent applications after the deal, owns patents relating to instant messaging, online chat and email, online media, search and browsers.
“Many of these patents relate to fundamental online communication technologies, stemming from AOL’s early dominance in the instant messaging and email markets,” the patent analyst Envision IP wrote in a blogpost.
AOL has not said exactly what the patents cover. Under the terms of the transaction, it will retain a licence for the patents.
The deal may come as a reprieve for Mr Armstrong, who is facing pressure from activist investor Starboard Value. Starboard is mounting a proxy campaign to win seats on AOL’s board and has been critical of Mr Armstrong’s decision to focus the firm on online media.
