Microsoft agrees $1bn deal for AOL patents

Software giant agrees to purchase 800 patents for roughly £800,000 each

Microsoft is to spend $1bn (£600m) purchasing 800 patents from AOL, which equates to roughly $1.3m (£800,000) per patent.

The patents mostly relate to search, email, instant messaging and online advertisements - cornerstones of the internet economy - leaving AOL with a remaining portfolio of around 300 patents.

The software giant hopes to see a swift but lasting return on its investment as smartphone makers, among others, will be forced to pay it licence fees to use the technologies as mobile access to internet services becomes the norm.

Part of the motivation behind the deal is also to keep intellectual property out of the hands of Google and Apple, who own and operate the Android and iOS mobile platforms respectively.

Brad Smith, general counsel and executive VP, legal and corporate affairs, Microsoft, said that his firm had been planning the purchase for a long time.

"This is a valuable portfolio that we have been following for years and analysing in detail for several months," he said.

"Microsoft was able to achieve our two primary goals: obtaining a durable licence to the full AOL portfolio and ownership of certain patents that complement our existing portfolio."

The transaction will be completed by the end of the year, subject to regulatory approvals.

Google acquired a raft of patents last year when it bought Motorola Mobility for £7.7bn, securing the firm's 17,000 patents as part of the deal.

At about the same time, Microsoft teamed up with Apple and BlackBerry manufacturer RIM, among others, to acquire Nortel's 6,000 patents for £2.8bn.