April 23, 2012 2:32 PM

Fenwick, Covington Advise as Facebook Snags Chunk of AOL Patent Portfolio From Microsoft

Posted by Drew Combs

Just two weeks after saying it would pay AOL $1.1 billion in cash for roughly 925 U.S. patents and patent applications plus a license for AOL's remaining 300 patents, Microsoft Corp. announced Monday that it has agreed to sell a sizable chunk of those IP assets to Facebook Inc. for $550 million in cash.

According to a Bloomberg report published last Thursday, Facebook had bid on the AOL patents, only to see Microsoft walk away with the prize. Based on the deal announced Monday, though, Facebook will essentially get what is after: about 650 of the AOL patents and patent applications, as well as the right to license the AOL patents that will remain with Microsoft.

According to a statement announcing the deal, Microsoft will retain ownership of 275 AOL patents, as well as a license to the 650 AOL patents and applications it is selling to Facebook.

In the statement, Facebook general counsel Ted Ullyot described the transaction as "another step in…building an intellectual property portfolio to protect Facebook’s interests." In the same statement, Microsoft executive vice president and general counsel Brad Smith hailed the deal for allowing the computing company to "recoup over half of our costs while achieving our goals from the AOL auction."

For representation in its dealings with Facebook, Microsoft turned to a team of lawyers at Covington & Burling led by San Francisco–based corporate partner Bruce Deming. Other Covington lawyers working on the matter include New York–based tax partner Robert Heller, San Francisco–based IP partners Evan Cox and Amy Toro, San Francisco–based corporate partner Kenneth Ebanks and Brussels-based antitrust partner Miranda Cole.

Microsoft was also advised on U.S. antitrust issues by a Cadwalader Wickersham & Taft team led by Charles "Rick" Rule, the head of Cadwalader's antitrust group and managing partner of the firm's Washington, D.C. office.

Both Covington and Cadwalader advised Microsoft in connection with the company's acquisition of the patents from AOL.

Facebook is being advised in the matter by lawyers from Fenwick & West and Cooley.

The Cooley team is led by Reston, Virginia-based partner Adam Ruttenberg, who heads the firm's technology transactions group.

The Fenwick & West team is led by San Francisco–based partner Douglas Cogen, who chairs the firm's mergers and acquisitions group.

Fenwick has deep ties to Facebook. As The Am Law Daily reported earlier this month, the firm represented the company in connection with its  $1 billion acquisition of photo-sharing software start-up Instagram. The firm is also working with Simpson Thacher & Bartlett to help take Menlo Park, California–based Facebook public. Facebook filed for a $5 billion initial public offering in early February.

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