A half-billion-dollar patent deal between Facebook and Microsoft Corp. (IW 500/16) was announced on Monday as the social network hardened its defenses ahead of going public with a stock offering on the NASDAQ.
Facebook said it would pay Microsoft $550 million for some of the patents the software giant recently acquired from AOL.
Facebook will pick up around 650 of the 925 patents Microsoft bought earlier this month in an auction from AOL in a nearly $1.1 billion deal, Facebook and Microsoft said in a statement.
Facebook's general counsel called the move "another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook's interests over the long term."
"Today's agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction," added Microsoft Executive Vice President Brad Smith.
Facebook also arranged to license the remaining 275 remaining patents or applications in the portfolio being bought by Microsoft, which gets the right to use the patented technology going to the California-based social network.
"Today's agreement with Microsoft represents an important acquisition for Facebook," said the social network's General Counsel Ted Ullyot. "This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook's interests over the long term."
Facebook is expected to go public next month on the technology-heavy NASDAQ exchange for a much-anticipated stock market debut.
Facebook will trade under the symbol "FB" in a record-setting initial public offering of shares on the NASDAQ, according to unconfirmed reports.
Facebook in February filed to go public and could raise as much as $10 billion in the largest flotation ever by an Internet company on Wall Street.
The paperwork filed for the initial public offering provided the first glimpse of the financial details of the web giant launched eight years ago by Mark Zuckerberg from his Harvard University dorm room.
Facebook, which is shifting operations to a former Sun Microsystems campus in the California city of Menlo Park, reported net income of $668 million last year.
Revenue nearly doubled to $3.7 billion in 2011, with most of it coming from targeted advertising gleaned from personal information shared by the hundreds of millions of users of the platform.
Facebook -- the leading social network in all but six countries, notably China and Russia -- said it has more than 845 million users including 483 million who log in daily.
Facebook's value has been estimated at between $75 billion and $100 billion.
Copyright Agence France-Presse, 2012
