Microsoft said in a statement that the AOL patents would “complement” its existing trove of patents.
“This is a valuable portfolio that we have been following for years and analyzing in detail for several months,” said Brad Smith, Microsoft’s general counsel and executive vice president.
AOL shares have surged to their highest level in more than a year after it said it has agreed to sell 800 of its patents and license others to Microsoft for about $1 billion in cash. (April 9)
News of the patent sale pushed AOL’s stock up more than 43 percent.
Google, which was relatively behind in its patent portfolio size, has been playing catch-up. Google purchased Motorola Mobility last year for $12.5 billion, largely to acquire the company’s patents related to cellphone technology. Google made its move after a group of the company’s rivals, including Microsoft and Apple, pooled $4.5 billion to purchase the patents of bankrupt wireless company Nortel.
The big problem with patents, according to experts, is that beginning in the mid-1990s, government officials began issuing amorphous-sounding patents for software and business methods. Whereas the patent for a particular drug might be easy to describe — simply laying out its chemical makeup, for instance — software patents get fuzzy very quickly, often because of broad wording.
For instance, in the fight between Yahoo and Facebook, Yahoo claims that Facebook’s news-feed feature violates its “dynamic page generator” technology patent, which was filed in the 1990s when the company began allowing users to personalize their Yahoo pages. Yahoo also holds a patent on “automatically generating user-customized notifications of changes in a social network system.”
Software patents are often so hard to understand that many developers cannot even figure out whether they are infringing on someone else’s patent before they proceed with their work.
There are not even enough patent lawyers to cover the amount of labor required to scan the hundreds of thousands of software patents that have been issued and figure out exactly what they say, according to a recent research paper by Timothy B. Lee, an adjunct scholar at the Cato Institute, and Christina Mulligan, a postdoctoral resident fellow at the Information Society Project at Yale Law School. They concluded that at least 2 million patent lawyers would be required to work full time to determine whether a company had infringed on any new patents issued in a given year.
President Obama last year signed a bill into law meant to reform the patent system. But many experts said the bill had been so diluted after years of lobbying by business groups that it is unlikely to do much to repair the country’s dysfunctional patent system.