Facebook has paid Microsoft $550m to buy about 70% of the patent portfolio the tech giant itself acquired from AOL for more than $1bn just a fortnight ago.
The move forms the latest chapter in the battle for intellectual property in the digital sector, as the likes of Google, Facebook, Apple and Microsoft tussle with each other over the rights to provide their clients and customers with the best technology.
A lawyer for the social network described the transaction as a “significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests”.
Microsoft paid more than $1bn for most of AOL’s patents, beating rivals reported to have included Facebook.
Facebook was sued by Yahoo for patent infringement earlier this year.
The social networking site, which is preparing for a stock market listing, also reported a drop in its first quarter profits to $205m from $233m a year earlier.
Microsoft bought 925 patents and patent applications from AOL. It is now selling 650 of those patents to Facebook as well as licences to the other 275.
“Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction,” said Microsoft’s general counsel Brad Smith.
There has been a series of recent patent deals between technology companies as they try to defend themselves in lawsuits.
If a company successfully sues another it can demand a sales ban of its competitor’s products, or force the loser to pay expensive licence fees.
Since the start of the year, Intel, Google and Facebook are among those to have bought significant numbers of patents from other technology companies.
Facebook bought a number of patents from IBM last month.
Meanwhile, Facebook suffered its first quarter-on-quarter revenue fall as it posted Q1 turnover down 7% to $1.06bn, representing year-on-year growth of 45%, slowed from 55% in Q4, citing seasonally-impacted advertising trends, which it warned could become more pronounced going forward.
Pre-tax profit was down 12% year-on-year at $205m, hit by rising staff numbers and the cost of employee stock options.
The social network, which is expected to conduct an IPO within weeks, also ascribed a valuation of $77bn to itself, based on the share price used in its recent $1bn acquisition of Instagram.
Facebook also revealed that it has agreed to pay $200m to Instagram if its deal to buy the photo-sharing firm were to fall through.
