Facebook pays Microsoft $550 million for AOL patents

SAN FRANCISCO (Reuters) - Facebook will pay MICROSOFT (MSFT.NQ)Corp $550 million in cash for hundreds of patents recently sold by AOL, the social networking company's latest move to bulk up its intellectual property in the wake of a lawsuit filed by Yahoo.

The deal will give Facebook 650 patents and patent applications, as well as a license to another 275 patents and applications owned by Microsoft.

Microsoft trumped Amazon, eBay and other tech giants earlier this month with its more than $1 billion purchase of most of AOL Inc. patent trove.

Facebook's deal with Microsoft comes as the world's No.1 social networking company is preparing for an initial public offering that could value it at up to $100 billion and as Facebook fights a legal battle with Yahoo Inc .

Yahoo sued Facebook earlier this year, alleging that Facebook infringed 10 Yahoo patents, including several that cover online advertising technology. Facebook countersued Yahoo in April, alleging that Yahoo infringes 10 of Facebook's patents.

In March, Facebook acquired 750 patents from International Business Machines Corp .

(Reporting By Alexei Oreskovic; Editing by Leslie Gevirtz)