Microsoft’s Patent power-grab

So, Microsoft spent over a billion dollars to out-bid Google on a bunch of patents from AOL. But WHY? AOL isn’t exactly a major player in the game anymore and the bulk of their patents haven’t been put into practical use for years.

Many in the industry are assuming that Microsoft did it out of their usual trying-to-beat-Google-to-the-punch philosophy, but it turns out that Microsoft (finally) had an ulterior motive (especially since Google never officially announced an interest in the patents).

Microsoft buys a bunch of patents from AOL (source : OiMax)

The 800 patents, worth an average of $1.25 million a piece, are important in terms of intellectual property rights as Microsoft cites the patents more often than any other tech company on the planet. Microsoft cited the 800 patents 1,331 times, which is even more than AOL themselves who cited the patents in just 1,267 instances. IBM cited them 570 times, AT&T 419 times, Yahoo! 362 times and Google just 304 times. Making Google’s sole possible interest in the patents being to make Microsoft bow down to the Google gods.

Microsoft had two motivations for buying the patents though: to protect their own patent-citation interests and to keep the patents away from others who knew how often Microsoft cited them and could hold them over Microsoft’s proverbial head.

This still begs the question though: how important are these patents really? Well, let’s look at the bundled patents in the AOL portfolio. They have an average age of just four years, which would give Microsoft plenty of time to cycle them through their licensing department (which is still one of the biggest and most aggressive on the planet) and they would offer Microsoft leverage over Google when it comes to platform licensing.

The details of exactly which patents are included in the 800-patent bundle are fuzzy at best but All Things Digital’s Peter Kafka has made some likely, and astute, assumptions that many patents will likely be part of AOL’s Netscape acquisition patent gain. Kafka’s (no, not THAT Kafka) educated guesses include the inclusion of the following former Netscape patents:

  • An application-packaging technology patent that delivers apps, over networks, to run in web browsers.
  • A patent covering the technology that auto-fills webpage forms.
  • A patent Netscape never monetized on the Secure Sockets Layer (SSL) encryption methodology—a technology later renamed Transport Layer Security (TLS).
  • A web server/browser preservation technique that includes how e-commerce shopping carts add and preserve items over time.
  • HTTP patent technologies.
  • The patented technology that allows hyperlinks in videos (think YouTube ads and links).
  • An email-client messaging technology (both Netscape AND AOL were separately awarded patents in email-client instant messaging so this is a likely patent in the bundle).
  • A patent that shows users how hard, or easy, their password is to crack.

If you look at all of these possible patent-bundle inclusions with a Microsoft/Google lens you can understand why Microsoft patent bundle purchase would give them much-needed leverage over their arch nemesis Google.