Microsoft Buys 800 AOL Patents For $1 Billion 103
netbuzz writes "Marking the latest escalation in the technology industry's intellectual-property arms race, Microsoft is paying AOL a shade over $1 billion for 800 patents, the cream of which AOL CEO Tim Armstrong has described as 'beachfront property in East Hampton.' Armstrong insists they haven't left the cupboard bare: 'We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value.'"
First "Me too"? (Score:5, Funny)
Do they cover 'leet? Follow-up posting with naught but "me too"? Or do they cover burying the public in excessive copies of useless physical media?
Patents expire (Score:5, Interesting)
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Patents on behavior seen in 1993, when AOL first connected to Usenet, are due to run out very soon.
Great! I was worried MS would start sending me CDs by mail... now I'm even more worried this behavior will spread around!
Wait, was this one, one of AOL patents?
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The floppies weren't useless.
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The floppies weren't useless.
The CDs were useful too for a while, when they were being sent in perfectly good DVD cases.
But back when they sent the CDs in cardboard sleeves, I always wanted to retrieve them out of the trash, and put them back in the original recipients' mail boxes with an ominous note that said, "We know you threw this away. We don't like it when you do that."
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Not very good coasters. They had a hole in the middle!
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Or do they cover burying the public in excessive copies of useless physical media?
I used to call Compuserve and AOL's free number every couple of weeks to get them to send me a trial. It came on 2-3 floppy disks. Stick a new label on them, reformat, and they work well. I don't think I ever had to buy new floppy disks.
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Or do they cover burying the public in excessive copies of useless physical media?
Oh the horror--Microsoft unleashing billions of CDs with 500 free minutes of Windows 8, after which you have to buy it or reformat just to get it off your system.
Bullshit (Score:5, Funny)
"The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value."
Congrats, i think you just made it possible to win bullshit bingo with a single sentence!
Re:Bullshit (Score:5, Funny)
I was hoping for "synergistic" and "focus like a laser" to show up. Unless I hear those terms, the company just isn't a serious player in BB.
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Re:Come on, now (Score:5, Informative)
Would you rather see AOL become the next Rambus?
Personally I wouldn't be surprised if AOL slowly evolves into an e-mail portal for those who have had an address with them and are willing to pay $20 per year to keep that address, but they might be able to make something with the cash, if they're not horrifically stupid.
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Re:Come on, now (Score:4, Interesting)
AOL is a huge blog aggregator now. Engadget, HuffPo, Patch and hundreds of others. the days of the indie blogger are over
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However AOL is committing suicide as a blog aggregator, playing politics, just recently coming to the defence of Darth Cheney but cutting off and censoring anyone they dared to comment or blog against him. That's really stupid selling out the future of the company to feed personal politics.
AOL seems determined to die a slow ugly death, with one mistake after another.
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Its like selling your beach front property but maintaining beach access. no upkeep on the property. no loss of value when the patents expire.
by my math, Microsoft is not worth anymore because of this transaction. Value - 1Billion Cash + 1Billion assests = Value
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Its like selling your beach front property but maintaining beach access. no upkeep on the property. no loss of value when the patents expire.
by my math, Microsoft is not worth anymore because of this transaction. Value - 1Billion Cash + 1Billion assests = Value
While absolutely correct, their longer term value may change based on this transaction (for the positive or the negative). It all depends on the design and execution of their business plan to generate value from these patents. It may be "lawsuit roulette" or it may be "now we can safely innovate in this area as we are protected by these patents". In one way or another, MS expects to get value from these patents. Time will tell whether it was a good purchase or a poor one.
Re:Come on, now (Score:5, Insightful)
That all depends on whether you think those patents were worth more, less than, or equal to a billion dollars. It's a reasonable assumption that they were either worth less than a billion dollars, or cash on hand is more valuable to AOL than the potential future earnings the patents represent. A cake next week doesn't mean much to somebody who's starving today.
That doesn't, however, discard the alternate possibilities: Microsoft got a shit deal on a bunch of worthless patents and AOL needs the cash now, or Microsoft got a great deal and AOL just sold the only thing that might have saved them for a short-term boost, or anything in between.
The statement isn't tortious because "tort" is not a synonym for "lie" or "doublespeak" or anything of the sort, and even if it was, a bland sales-lingo statement could hardly be misconstrued as anything to base a business decision on. Maybe you took it that way, but if so, I think I'm safe in assuming you don't have the money necessary to actually be harmed by such a claim.
Minor point: tort vs. libel (Score:2)
The statement isn't tortious because "tort" is not a synonym for "lie" or "doublespeak" or anything of the sort
True, "tort" is broader than "libel", but I thought libel was a type of tort.
Re:Come on, now (Score:5, Interesting)
It matters what they're worth to the holder. AOL may not have been able to convert those patents into revenue other than by selling the patent outright (and obviously licencing some), whereas microsoft wasn't going to sell a product without the patent covering it. In that case the patents are worth different things to different people. MS may be able to add value, charge more, or make a new product, and being microsoft they will get more sales than if AOL did it.
Account also gets messy, because microsoft has 57 billion dollars cash on hand, or, I guess, 56 now. But with the government bond market paying next to nothing they're losing ~500 million a year to inflation, which is also close to nothing, but still more than MS is getting from sitting on the cash means they're losing PPP value. They *could* pay that to investors instead (dividends basically), but then they'd lose a chunk to tax etc. Part of the 'cost' to microsoft is what else where they doing with that money, what would it be worth next quarter/year.
Right now MS is probably getting 1% return on that cash pile, if they can get 2% on these patents from AOL that's a significantly better deal for them. And if it turns out to be a bad idea they have another 56 billion dollars waiting around, just in case.
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True. I'm not an MS investor so I figured they were just dumping money in the overnight bond market. 4.4% is pretty damn good. I suppose that's the difference between having 6 billion dollars and 60, when you have 60 you can have it in a lot more places than just treasuries.
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. But with the government bond market paying next to nothing they're losing ~500 million a year to inflation, which is also close to nothing, but still more than MS is getting from sitting on the cash means they're losing PPP value
This is a questionable assertion. Do you know for a fact that Microsoft's "short term investments" are so focused on cash and bonds? Generally, companies like Microsoft short-term investments highly diversified and managed - I mean if you have $XXB, wouldn't it be worth paying someone or 10 a few million to manage it like a hawk?
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as an AC above you pointed out, MS is making a quite respectable 4.44% apparently.
Re:Microsoft got... (Score:5, Insightful)
As I peruse the article, especially the updates, I don't think each and every one of those patents was exactly hand picked and of equal worth. My guess is that there's a couple of gems in there and a good deal of padding. Yet unfortunately those gems are probably worth more than the Billion.
AOL got slammed as one of the reasons for "Eternal September" yet that influx of users also helped end the "Revenge of the Nerds" attitude towards computing. They deserved what they had at the time, it was fair money earned. Then of course, the rest of the web caught up and passed them, etc. etc. So then the techies laughed at them for being has-beens.
So what's a "Has-Been" to do? Suppose they have a couple killer patents on something related to chat rooms for example. They'll never regain that former glory, so that patent is useless to them because it would take 30 billion and a marketing genius to do a turn-around. So heck, why not sell that killer patent? Maybe it and the 100 related ones are worth $500 million. Then a little last hour negotiating collected a little more cash by requiring that some lesser patents be bundled in there. MS has the money, so they just shrug, and maybe they don't even begrudge AOL the cash - I don't think I've ever heard of *AOL* threatening Microsoft in any year.
So maybe AOL can do something with the cash if they don't run out of time.
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Right - and let's say the golden patent for any and all types of chatroom did indeed get sold off. Good for AOL - MS will go ahead and do all the litigation (and will get the license payments), but AOL continues to use chatrooms because it's already licensed with MS. Some of AOL's competition goes away (or finds it more difficult to do business), and AOL collects a billion dollars. (MS does quite nicely out of this too, but it has to spend more money to make more money).
Sounds to me like a smart move. If AO
Re:Come on, now (Score:5, Insightful)
What? Do you have no concept of what is going on here?
Theoretically they just traded 1 billion dollars worth of useless patents that were just gathering dust for 1 billion dollars that they can use for anything.
They are worth today exactly what they were worth yesterday.
What they do with this influx of money will determine if they gain or lose value as a company.
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You know, AIM did stuff that I wish other chat programs would do.
"Ghost mode" was one of my favorite things. You'd appear as offline, but you could talk to any one person and only them. You can see who is online, but they can't see you. It prevents 11 IMs from popping up every time you sign on, and helps you keep conversations under control.
I wish Steam had something like this and a "notes" system as well. Some of my friends swap their names and avatars around so much I forget who the hell they are! I've re
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Most if not all MI clients have that, normally it is referred to as appear offline.
AIM might of invented it, but any full IM client has that functionality. As for steam, the steam client as a whole is missing a huge number of common features.
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Honestly, as you're talking about insulting our intelligence but not going into any depth, I'd be interested to see your explanation for why this action won't create long term shareholder value.
Re:Come on, now (Score:4, Insightful)
The company is worth less today than it was yesterday, and Microsoft is worth more.
How do you figure? You must be reaching the conclusion that the future value of those patents exceed the present value of $1 billion for AOL. Microsoft reached a similar, but different conclusion that the future value of those patents exceeded the present value of $1 billion for Microsoft. They quoted exec even says that these 800 patents "complement" MS's existing patents, so it's quite possible that both companies are worth more after this transaction. Indeed, that is one of the key underpinnings of transactional economics which you don't seem to understand. Both companies freely entered into the agreement based on the belief that they are better off for it. Now, it's possible that the people who made the decisions are wrong (either through corruption or ineptitude), but I don't think that is likely. It's more likely that AOL realizes that it can put $1 billion to better use (e.g. by expanding it's content empire) than those patents.
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These guys insist on insulting our intelligence by stating that they're creating 'long term shareholder value' by selling assets. That's BS. The company is worth less today than it was yesterday, and Microsoft is worth more. How is a statement like that not tortious?
They are creating 'long term shareholder value.' For Microsoft.
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These guys insist on insulting our intelligence by stating that they're creating 'long term shareholder value' by selling assets. That's BS. The company is worth less today than it was yesterday, and Microsoft is worth more. How is a statement like that not tortious?
Are you not aware of the concept of selling something at a profit?
If AOL had patents sitting there doing nothing, getting $1b would increase the company's value.
Negative Equity (Score:1)
So what they've bought is negative equity. It doesn't let them do anything they aren't already doing, it doesn't give them any secret sauce their engineers are missing, it is simply an attack chest to attack competitors, presumably Google with?!
These patents, they're all negative equity, that $1 billion may be able to kill $10 billion in asset value in other companies. Microsoft can't innovate so it litigates.
How is it different from any other patent troll?
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Admittedly, I don't think a lot of what's patented in software should be able to be patented, but our Patent Office doesn't have the expertise or manpower to deny so many patents that they should deny.
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You have to remember that Nathan Myrvold is the founder of Intellectual Ventures, perhaps the biggest patent troll of all.
And that Bill Gates is the uber copyright troll, the prime sponsor of for pay software for PCs.
http://www.digibarn.com/collections/newsletters/homebrew/V2_01/homebrew_V2_01_p2.jpg [digibarn.com]
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WOW AOL is still alive (Score:5, Funny)
Raise your hand if you knew AOL was still around?
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My mother is still on AOL. They switched to a free service if you use somebody else for an ISP, and I know that there are a ton of people who still use it for dial-up service because there is no other option. If you live 20 miles into the country, there is no cable, and no satellite, and likely no cell data coverage. So unless you are going to drop a few hundred bucks to check email and view a couple of web pages... "You've got Mail!"
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No satellite you say? I don't think you understand what a satellite is....
Granted, it sucks compared to most everything else, but satellite internet is much better than dial up. It's not going to be as cheap though.
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Re:WOW AOL is still alive (Score:5, Informative)
Huffington Post, TechCrunch, Moviefone, MapQuest, Joystiq, Engadget
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Ahh the good old days.
http://www.youtube.com/watch?v=4Gj8bin3vlQ [youtube.com]
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In the end (Score:5, Funny)
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Because for the most part you can normally the terms of patent use negotiable. And for big companies like that they will often only notice you if you become a threat and big enough to take the hit, however like most companies they either trade patent rights or license use of their patents, and go one back to normal. Vs. the Small Troll who may be scouring the internet and hit you when you are small.
Also the big three are always looking for small
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MPEGLA laughs at your naïveté.
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A patent pool company (until now unbeknown to me) that has registered the bootstrap "the standard for standards". The horror...the horror.
If their website is anything to go by, they make themselves look like foolish small fish. But I guess, to be trading water in the patent pool, one has to have larger shark fins. I could be mistaken though.
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I don't recall Google suing suing anyone for patent infringement. After doing a (admittedly quick) search on the topic, the closest I got was something on an Apple fan site about Motorola sung for some hardware patents supposedly with Google's blessing, although it looks like it started before they were bought.
Money laundering? (Score:1)
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I mean, seriously, what does AOL still do?
Anonymous Coward answered that [slashdot.org].
AOL Expansion? (Score:1)
Maybe AOL will use their new influx of cash to expand current operations? We all know the dial-up market needs room for improvement.
Treading water... (Score:3)
Let's see, does this mean the GIF patent goes to Microsoft? Hmm.
It was a good business move for AOL, but this does look like someone one does to stave off shuttering the HQ. They still have a significant advertising business, and some other properties, but AOL itself is definitely still on the slow slide.
I'm actually interested that the value is going to the shareholders, instead of being reinvested in the company. Usually, dividends and cash heading back to investors is a sign of a stable business, and is a good thing, but AOL is far from that at the moment. That means it is a play to keep the share price up. There are good reasons to keep the share price up as well, but it probably does not mean any significant change in their fortunes.
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Let's see, does this mean the GIF patent goes to Microsoft?
The GIF patent is expired, and has been for about 9 years...
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GIF patent was on the compression used by GIF, not GIF itself. The patent was held by UNISYS, not AOL/CompuServe.
BINGO! (Score:4, Funny)
The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value.
BINGO!
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LOL. AOL is the BIGGEST destructor of shareholder value I can think of. The Time Warner AOL merger wiped out billion after billion of capital.
The only thing this does is unlock a billion dollars to be used for executive bonuses and golden parachutes for when AOL finally is buried.
Wow (Score:5, Informative)
What's in there? (Score:3)
Is there a list of what patents were transferred?
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thirded (Score:2)
I too wondered immediately what patents actually changed hands, and more importantly if any of them had ever been ruled upon by a court...
I am disappointed that many /.'ers comments seem to focus on the hype
1980's: Merger Mania! 2010's: Patent Mania! (Score:5, Insightful)
It really seems now that the Big Game Hunt in town is Patent Barter. Having world class patent attorneys, is more important to a company's long term tech strategy, than having world class researchers.
You can come up with something brilliant, truly innovative on the tech front, but be devastated on the patent front. Thus, rendering your research worthless.
Tech patent attorneys. This decade's Arms Race.
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You can come up with something brilliant, truly innovative on the tech front, but be devastated on the patent front. Thus, rendering your research worthless.
You're looking at it backwards... If you've come up with something brilliant and truly innovative, you can get a patent on it. Maybe you can't practice without infringing someone else's patent, but they can't practice your improvement without infringing yours, thus leading to potential cross-licensing opportunities.
For example, say I invent a stool comprising a horizontal sitting surface connected to at least three legs. You come along and realize that adding a back and arms would be great, and invent a ch
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Nice utopia that you describe there. Thing is, the inventor with the smaller purse will just sell his patent for peanuts to the other party, because he/she can't afford a long court struggle that will suck up all his capital and all hopes for implementing his/her invention with it.
If I come up with something brilliant and truly innovative I won't tell a soul about it. If the novelty is about something in the production process that will not show in the final product (or only its effects will show), then it
Patent Gnomes (Score:1)
Aol? (Score:1)
800 patents? (Score:1)
The fact that AOL had 800 patents is a sign of some serious problems with our patent system.
AOL patents on networked systems (Score:4, Insightful)
It would not surprise me if AOL had useful patents concerning the design of networked systems to handle their millions of users. They were probably the first to encounter the problems that having potentially 25 million+ users would cause.
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Oh, we were... I remember trying (and failing) to convince Cisco that they should make some type of load balancer. They didn't see the need.
The real question is... (Score:2)
... who owns the "You've got mail!" meme?
So does this mean... (Score:2)
Translation (Score:3)
AOL's CEO today said at a press release: "Although no one uses any of the products or services we provide anymore, we're still able to leech off of a broken patent system to make a huge amount of money for me."
AOL was the first big social network (Score:2)
AOL was the first big, successful social network. AOL pioneered in social networking, online virtual worlds (on a Commodore 64!), online gaming, online dating, and music downloads. They were there first, and they made it work. So they should have the key intellectual property for social.
How's about some Yankee Innovation???? (Score:4, Insightful)
Waste (Score:1)
Netscape (Score:2)