5 ms·

Microsoft comes to Facebook's aid with 550 patents

47 points by bproper 14y ago

larrik 14y ago
Title is wrong. It's Facebook paying Microsoft $550 million for about 650 patents (former AOL patents).
- deleted 14y ago
  [deleted]
- rollypolly 14y ago
  I've always wondering how large companies buy and sell patents in bulk like that. Do they just point at a filing cabinet and say, there's 650 patents in there, it's yours for 550M$, take it or leave it. Or do they have an army of lawyers pour over them one by one?
  - eblume 14y ago
    It's a bit of both. I don't work in legal but I see them going at it from time to time when patent stuff comes up. There is definitely 'the filing cabinet' (more like a room) and it contains one of several copies of the important documents - but the lawyers are the interface to those documents. Sometimes I can't help but feel that most lawyers do not much more than present an obfuscation layer around standard forms.
    - rollypolly 14y ago
      Sometimes I can't help but feel that most lawyers do not much more than present an obfuscation layer around standard forms. I bet non-technical people also have that feeling about engineers. "It took you a second to change the behavior of this. You're obviously not working very hard." ..when in reality, it took a lot of effort to make a system flexible enough to adapt its behavior quickly to changes in requirements. ...but I'm getting off topic now. :)
      - eblume 14y ago
        No, it's a great point, and one well taken.
      - fleitz 14y ago
        Great point, my lawyer has saved me much more than she costs because she alerts me to things I had no idea I was even doing incorrectly. Things like an audit waiver so I don't have to pay an auditor to audit my own companies' finances. Its not about how much a lawyer costs, its about how much they make you.
  - r00fus 14y ago
    No need for an army of lawyers. Most patent shops, either NPEs (ie, trolls) or large corporations big patent warchests will use legal case management software, eDiscovery systems, and patent ownership/submission tracking software. In short, patents, like people, offices and other "assets" are managed using enterprise software. I would assume that it's pretty easy for a company to take a set of claims/wording (ie, patents asserted in Yahoo's suit) and search using their systems against a corpus of both internal (patents, etc) and external sources (case findings and news - ie, like Lexis Nexus) the best fits to meet a given "need" - either the company is being sued, filing suit, or in this case, helping an ally/customer (note: Microsoft also owns an not-insignificant chunk of Facebook).
ajross 14y ago
$550M in cash this week for a patent portfolio. $300M last week for Instagram (edit: typo). This has been a very expensive few days for what is still a private company. How much cash does Facebook have?
- soupboy 14y ago
  It is Intagram, not Infogram. And the purchase price was $1B, not $300M. Facebook's trailing 12M revenue was a billion dollars, so it's not as if they have cash problems.
  - ajross 14y ago
    It was a billion in nominal value, but most of that was Facebook stock (at a valuation of $75B, thus all the stories last week about whether the IPO would cover that or not).
  - untog 14y ago
    It is Instagram, not Intagram. (sorry, I had to)
- teej 14y ago
  About $4bn as of the S1 filing. They plan to raise $5bn in the IPO. In other words, they have plenty of cash.
  - ajross 14y ago
    I dunno. I look at those same numbers and read "They've just blown through 25% of their cash on hand within a week." Something's weird. Could be they know the IPO is going to be huge, or they have a new revenue source, or they're desperate the IPO is going to tank and need to look wealthier than they are. But that's a high burn rate even for Apple or MS.
    - recoiledsnake 14y ago
      Looking at the burn rate makes sense only for ongoing operations and not for one-off purchases like these ones.
geetee 14y ago
The paper trail of ownership and licensing for these things must be pretty obnoxious.
soupboy 14y ago
Makes one think if Microsoft was acting as an intermediary for Facebook all along, maybe because AOL wouldn't sell the patents to a competitor?
ldayley 14y ago
While Microsoft is making a tidy profit from these patents, keep in mind that they have a +- 3% stake in Facebook. I'm sure they would love these Yahoo! lawsuits to go favorably for Facebook.
- freehunter 14y ago
  Then again, Yahoo search is powered by Bing. Microsoft has a stake in both aspects of the fight. I expect they'll be playing mediator, doing their best to make sure no one loses.
latchkey 14y ago
Instead of just working out a licensing deal on Yahoo's 10 claimed infringing patents, Facebook spends $550 million to buy 650 aol/m$ patents. I bet FB's board was involved with this decision.
- jimmyvanhalen 14y ago
  it's a pre-emptive strike to anyone who's thinking about suing Facebook.
  - rbanffy 14y ago
    Or a weapon to sue anyone who dares to threaten Facebook.
- option_greek 14y ago
  Throwing money at yahoo just brings on more patent suits (from others). Throwing money at patents provides them cover.
wavephorm 14y ago
I think we are about to witness a Software Patent World War unfold in MAD-style (mutually assured destruction). The software patent laws have trapped everyone into corners from which it is no longer possible to innovate without trampling on someone else's intellectual property. The absurdity of our litigious bureaucracy is going to de-evolve into madness that will make patent lawyers every where squeal with joy and the make the lives of technology workers everywhere suck.
- rbanffy 14y ago
  The analogy fails because, in MAD, the unthinkable scenario happens quickly and there is no turning back once the process starts - effectively preventing it from starting - while in the lawsuit-standoff-from-hell it is a very long and expensive process with plenty of opportunities to abort and negotiate a deal.
  - wavephorm 14y ago
    This is from 2010, and the landscape has become quite a bit worse since then: http://www.guardian.co.uk/technology/2010/oct/04/microsoft-motorola-android-patent-lawsuit http://www.guardian.co.uk/technology/2010/oct/04/microsoft-m...
    - rbanffy 14y ago
      Still, the MAD doctrine won't prevent this war. The damage is spread across periods too long to effectively prevent lawsuits. Or innovation. It will just raise entry barriers and prevent small players from entering the market (or impose additional costs when they become large enough).
johnohara 14y ago
Strictly from a cash perspective, that's just shy of 4 million copies of Windows 7 Professional OEM.

47 points by bproper 14y ago

larrik 14y ago

Title is wrong. It's Facebook paying Microsoft $550 million for about 650 patents (former AOL patents).

deleted 14y ago
[deleted]
rollypolly 14y ago
I've always wondering how large companies buy and sell patents in bulk like that. Do they just point at a filing cabinet and say, there's 650 patents in there, it's yours for 550M$, take it or leave it. Or do they have an army of lawyers pour over them one by one?
- eblume 14y ago
  It's a bit of both. I don't work in legal but I see them going at it from time to time when patent stuff comes up. There is definitely 'the filing cabinet' (more like a room) and it contains one of several copies of the important documents - but the lawyers are the interface to those documents. Sometimes I can't help but feel that most lawyers do not much more than present an obfuscation layer around standard forms.
  - rollypolly 14y ago
    Sometimes I can't help but feel that most lawyers do not much more than present an obfuscation layer around standard forms. I bet non-technical people also have that feeling about engineers. "It took you a second to change the behavior of this. You're obviously not working very hard." ..when in reality, it took a lot of effort to make a system flexible enough to adapt its behavior quickly to changes in requirements. ...but I'm getting off topic now. :)
    - eblume 14y ago
      No, it's a great point, and one well taken.
    - fleitz 14y ago
      Great point, my lawyer has saved me much more than she costs because she alerts me to things I had no idea I was even doing incorrectly. Things like an audit waiver so I don't have to pay an auditor to audit my own companies' finances. Its not about how much a lawyer costs, its about how much they make you.
- r00fus 14y ago
  No need for an army of lawyers. Most patent shops, either NPEs (ie, trolls) or large corporations big patent warchests will use legal case management software, eDiscovery systems, and patent ownership/submission tracking software. In short, patents, like people, offices and other "assets" are managed using enterprise software. I would assume that it's pretty easy for a company to take a set of claims/wording (ie, patents asserted in Yahoo's suit) and search using their systems against a corpus of both internal (patents, etc) and external sources (case findings and news - ie, like Lexis Nexus) the best fits to meet a given "need" - either the company is being sued, filing suit, or in this case, helping an ally/customer (note: Microsoft also owns an not-insignificant chunk of Facebook).

ajross 14y ago

$550M in cash this week for a patent portfolio. $300M last week for Instagram (edit: typo). This has been a very expensive few days for what is still a private company. How much cash does Facebook have?

soupboy 14y ago
It is Intagram, not Infogram. And the purchase price was $1B, not $300M. Facebook's trailing 12M revenue was a billion dollars, so it's not as if they have cash problems.
- ajross 14y ago
  It was a billion in nominal value, but most of that was Facebook stock (at a valuation of $75B, thus all the stories last week about whether the IPO would cover that or not).
- untog 14y ago
  It is Instagram, not Intagram. (sorry, I had to)
teej 14y ago
About $4bn as of the S1 filing. They plan to raise $5bn in the IPO. In other words, they have plenty of cash.
- ajross 14y ago
  I dunno. I look at those same numbers and read "They've just blown through 25% of their cash on hand within a week." Something's weird. Could be they know the IPO is going to be huge, or they have a new revenue source, or they're desperate the IPO is going to tank and need to look wealthier than they are. But that's a high burn rate even for Apple or MS.
  - recoiledsnake 14y ago
    Looking at the burn rate makes sense only for ongoing operations and not for one-off purchases like these ones.

geetee 14y ago

The paper trail of ownership and licensing for these things must be pretty obnoxious.

soupboy 14y ago

Makes one think if Microsoft was acting as an intermediary for Facebook all along, maybe because AOL wouldn't sell the patents to a competitor?

ldayley 14y ago

While Microsoft is making a tidy profit from these patents, keep in mind that they have a +- 3% stake in Facebook. I'm sure they would love these Yahoo! lawsuits to go favorably for Facebook.

freehunter 14y ago
Then again, Yahoo search is powered by Bing. Microsoft has a stake in both aspects of the fight. I expect they'll be playing mediator, doing their best to make sure no one loses.

latchkey 14y ago

Instead of just working out a licensing deal on Yahoo's 10 claimed infringing patents, Facebook spends $550 million to buy 650 aol/m$ patents. I bet FB's board was involved with this decision.

jimmyvanhalen 14y ago
it's a pre-emptive strike to anyone who's thinking about suing Facebook.
- rbanffy 14y ago
  Or a weapon to sue anyone who dares to threaten Facebook.
option_greek 14y ago
Throwing money at yahoo just brings on more patent suits (from others). Throwing money at patents provides them cover.

wavephorm 14y ago

I think we are about to witness a Software Patent World War unfold in MAD-style (mutually assured destruction). The software patent laws have trapped everyone into corners from which it is no longer possible to innovate without trampling on someone else's intellectual property. The absurdity of our litigious bureaucracy is going to de-evolve into madness that will make patent lawyers every where squeal with joy and the make the lives of technology workers everywhere suck.

rbanffy 14y ago
The analogy fails because, in MAD, the unthinkable scenario happens quickly and there is no turning back once the process starts - effectively preventing it from starting - while in the lawsuit-standoff-from-hell it is a very long and expensive process with plenty of opportunities to abort and negotiate a deal.
- wavephorm 14y ago
  This is from 2010, and the landscape has become quite a bit worse since then: http://www.guardian.co.uk/technology/2010/oct/04/microsoft-motorola-android-patent-lawsuit http://www.guardian.co.uk/technology/2010/oct/04/microsoft-m...
  - rbanffy 14y ago
    Still, the MAD doctrine won't prevent this war. The damage is spread across periods too long to effectively prevent lawsuits. Or innovation. It will just raise entry barriers and prevent small players from entering the market (or impose additional costs when they become large enough).

johnohara 14y ago

Strictly from a cash perspective, that's just shy of 4 million copies of Windows 7 Professional OEM.