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April 9, 2012 4:28 PM

Four Firms Take Lead on AOL's $1 Billion Patent Sale to Microsoft

Posted by Brian Baxter

Four Am Law 200 firms are working on a deal announced Monday that will see AOL sell a portfolio of more than 800 patents to Microsoft for nearly $1.1 billion in cash.

The proposed transaction was a boon to AOL’s sagging share price, which soared more than 45 percent in trading on Monday, as the New York–based company became the latest to cash in on its intellectual property assets, perhaps signaling that a potential bubble on patents hadn’t burst with Eastman Kodak’s bankruptcy filing earlier this year.

Wachtell, Lipton, Rosen & Katz and Finnegan, Henderson, Farabow, Garrett & Dunner are advising AOL on the transaction, which also calls for the seller to grant a nonexclusive license on another 300 patents to Microsoft.

The Am Law Daily reported last summer on AOL’s retention of Wachtell. AOL declined to say at the time why it had retained the firm instead of its longtime outside counsel at Simpson Thacher & Bartlett, which handled the Internet services and media company's $315 million acquisition of The Huffington Post early last year. Wachtell's hire led to speculation that AOL could be sold a private equity buyer.

Wachtell founding partner Martin Lipton and corporate partners David Karp and David Shapiro are leading the firm's AOL team, which includes antitrust partner Damian Didden and tax partner T. Eiko Stange. (Kodak also retained Wachtell last year to protect $2.9 billion in tax credits the company would need to offset income it could earn if it chose to sell some or all of its digital patent portfolio.)

Finnegan Henderson, a firm renowned for its IP expertise, did not immediately provide a list of lawyers advising AOL on the proposed patent sale. AOL’s general counsel is Julie Jacobs.

On the buyers' side, Microsoft has turned to Cadwalader, Wickersham & Taft and Covington & Burling for outside counsel.

Covington corporate partner Bruce Deming in San Francisco is leading a team from the firm that includes IP and antitrust partner Evan Cox, EU competition partner Miranda Cole, and tax partner Robert Heller.

Charles “Rick” Rule, the head of the antitrust group and managing partner of Cadwalader's Washington, D.C., office, is serving as U.S. antitrust counsel to Microsoft.

Cadwalader and Covington both advised Microsoft last year on the Redmond, Washington–based software giant’s $8.5 billion acquisition of Internet voice and video chat service Skype Global. Cadwalader’s Rule has long guided Microsoft through delicate regulatory waters, including the company’s increasingly frequent antitrust spats with technology rival Google.

Bradford Smith serves as general counsel and chief compliance officer for Microsoft, which shook up its outside legal roster three years ago. In 2010, Microsoft hired the former cochair of Dechert’s white-collar and securities litigation group, David Howard, as its new deputy general counsel in charge of litigation.

The company’s patent portfolio transaction with AOL is expected to close by the end of 2012, according to a statement announcing the proposed deal.

 

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