Los Angeles Times - "What Microsoft's really buying in AOL patents deal: Leverage"

AOL just sold 800 patents to Microsoft, and this latest patent super-sale has IP experts speculating about how Microsoft will use this latest infusion of IP. Alexander Poltorak explained the significance of this sale and of patents in general in an LA Times article. ("What Microsoft's really buying in AOL patents deal: Leverage" The Los Angeles Times - April 9, 2012)

Article excerpt: AOL's surprising sale of 800 patents to Microsoft for about $1.06 billion gives the company a cash infusion that Wall Street seems to like. Although neither company is saying what the patents cover, what Microsoft actually bought was leverage.

"Patents are nothing but a license to sue," to exclude others, said Alexander Poltorak, chairman and chief executive of General Patent Corp. A license to sue, but an opportunity to strike a deal. "Only [between] 3 and 4% of patent lawsuits end up in trial," with most ending up in an arrangement beneficial to both companies, he said.

And with a patent portfolio with a billion-dollar sale price, Microsoft has likely bought itself a lot of leverage, Poltorak said. "If AOL got $1.1 billion for selling, these patents must be 10 times as much in the hands of someone who plans to enforce."

While AOL did get a good chunk of change for the patents in the deal announced Monday, they might have made more money in enforcing them, Poltorak said. "On the open market, patents are sold for 10% of their enforcement value."

...[The AOL-Microsoft deal] comes amid a significant patent struggle between Microsoft and Motorola, which is being bought by Google. Microsoft may be able to use the patents it is buying from AOL to cajole a better deal through cross-licensing deals, patent expert Poltorak said.

Read full article on the LA Times website