Stock Market Authority LLC

April 24, 2012 08:50 ET

Microsoft Corp. (MSFT) Sells AOL Inc. (AOL) Patents on to Facebook-Could SEFE Inc. (SEFE) Be Next?

Microsoft Sells Much of AOL Patent Portfolio on to Facebook for $550 Million

NEW YORK, NEW YORK--(Marketwire - April 24, 2012) - Microsoft Corp. (MSFT), which just bought patents from AOL Inc. (AOL) for $1 billion, is now turning around and selling most of them to Facebook for $550 million.

Facebook is buying about 650 of the 925 AOL patents and patent applications that Microsoft bought, Microsoft and Facebook said Monday.

Facebook will also get a license to use the rest of the AOL Inc. patents that Microsoft bought. Similarly, Microsoft Corp. will get a license to use the patents Facebook is buying. This part of the arrangement amounts to an agreement between Facebook and Microsoft not to sue each other over any of the AOL patents. The companies are not saying what the patents cover.

Microsoft said the deal enables it to recoup half the cost of the AOL deal while reaching its goals for the purchase. Facebook's general counsel, Ted Ullyot, called the move a "significant step in our ongoing process of building an intellectual property portfolio to protect Facebook's interests over the long term."

Patents have become a valuable commodity for technology companies in recent years, and companies frequently use them in lawsuits against one another.

Facebook, which is expected to go public in May, is embroiled in a patent suit with struggling Internet company Yahoo Inc. (YHOO). Yahoo had sued Facebook saying the company violates 10 of its patents covering advertising, privacy controls and social networking. Facebook responded with its own lawsuit this month accusing Yahoo of violating 10 of its patents.

The patents from AOL are adding to Facebook's quickly expanding patent portfolio. The company recently acquired 750 patents from IBM Corp. (IBM) covering technologies that deal with software and networking. At the end of 2011, Facebook had just 56 U.S. patents, which was a relatively small number compared with other big tech companies.

Facebook has said it expects to raise $5 billion in its initial public offering. The actual figure is expected to be higher, however, and could value the Menlo Park, Calif.-based company at as much as $100 billion.

SEFE Inc.'s (SEFE.ob) methodology follows the same practice as these behemoth corporations, as they have spent several years gaining approval for their patents. Now that the time is quickly approaching where these patents can be commercialized, SEFE has placed itself in a position where any company looking to enter this sector of the $6 Trillion Energy business will have no choice but to purchase these patents or buy SEFE outright.

Could SEFE be the next big patent takeover deal in the news?

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