Facebook has signed an agreement to acquire $550 million in patents from Microsoft, the companies
announced jointly Monday. The patents were part of the $1.065 billion in patents Microsoft purchased
from AOL earlier this month.

In the initial agreement, Microsoft took ownership of approximately 925 U.S. patents and patent applications,
in addition to a license to AOL’s remaining patent portfolio of about 300 patents. Facebook has now taken
possession of 650 of those patents, “plus a license to the AOL patents and applications that Microsoft will
purchase and own,” Facebook said in a release.

That leaves Microsoft with 275 of the original patents and applications it purchased from AOL. Microsoft will
also retain a license to 650 of the patents and applications now owned by Facebook, in addition to the 300
or so AOL patents it gained a license to earlier.

“Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals
from the AOL auction,” Brad Smith, executive vice president and general counsel of Microsoft, said in the
release.

Two people familiar with the details of the earlier deal told Bloomberg Businessweek that Microsoft did not
intend to keep all of the patents it acquired from AOL. Those sources also said that Facebook had made
a bid for those same patents previously, but the bid was too low.