Yahoo! Inc. (YHOO) to Sell 3,000 Patents

Yahoo Headquarters

Yahoo! Inc. (NASDAQ:YHOO) is selling of around 3,000 patents and pending applications, according to the Wall Street Journal, which was confirmed by the company’s spokesperson.

In a statement, Yahoo’s spokesperson said, “This represents a unique opportunity for companies operating in the internet industry to acquire some of the most pioneering and foundational patents related to web search and advertising.”

A person familiar with the matter said the company contacted private-equity firms, strategic buyers, and investment firms focused on intellectual property to submit bids for the patents.

Maulin Shah, a managing attorney at Envision IP suggested that Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) are probably among the interested potential buyers for the patents.

In April, Shah estimated that Yahoo’s enforceable patents (around 2,000) was worth between $965 million to $1.34 billion based on several factors including its historical patent licensing revenue. Over the past three years, the company already generated $600 million in patent sales and licensing fees.

Verizon bids $3 billion on Yahoo’s core business

The move comes amid the company’s auction process for its core internet business. It was recently reported that Verizon Communications (NYSE:VZ) intends to place a $3 billion bid for Yahoo’s core business, which makes the telecommunications company the leading contender in the second round of bidding.

Analysts previously estimated that Yahoo’s core business is worth around $4 billion to $8 billion. Verizon’s offer is lower than the estimate because it is not bidding on a huge portion of the most valuable patents of the technology company.

The spokesperson said the company is offering a smaller group of patents 500 U.S. patents and over 600 U.S. pending applications—as part of the auction of its core web business. Those patents are critical to the company’s web properties.

Ad-matching technology

The Wall Street Journal noted a filing with the U.S. Patent and Trademark Office (USPTO) that Yahoo transferred 2,659 patents to a separate subsidiary named Excalibur IP LLC in April.

The collection of patent under Excalibur covers key areas including search, e-commerce, and online advertising. It also included a patent related to an ad-matching technology—the center of a previous lawsuit between Yahoo and Google.

Overture, an online advertising company developed the ad-matching technology, which filed a patent infringement case against Google in 2002. Yahoo later acquired Overture, and settled the case with Google in 2004. The search engine giant paid Yahoo $300 million worth of stock for the license to use the ad-matching technology.