For AOL the past few years haven’t been exactly the high point in its market share, revenue or visibility to clients for that matter. The company has been struggling for some time now, and as many companies in the IT business it tried everything before taking on the last resort: patent selling. Eventually, AOL came to that too, and now Microsoft has to make plans with 800 AOL patents worth $1 billion.

This Monday, AOL made an announcement that can only point to the urgent situation the company is in. The company announced it is selling more than 800 patents worth $1.06 billion and the buyer is none other than Microsoft.

Although industry analysts claim the deal shouldn’t make shareholder concerned about the status of the company, the size of the deal came as a surprise for investors and the market. They both took the news well and AOL’s shares went up by more than 40 percent.

AOL Chief Executive Tim Armstrong called the patents deal a “full-blown dynamic auction” where Amazon, eBay, Google, Facebook and Microsoft placed their bids. But it seems that AOL had a favorite buyer in mind before the auction would even start as Tim Armstrong confessed he called Microsoft Chief Executive Steve Ballmer about the deal. The buyer, which became Microsoft, was selected earlier this month, on April 5th.

Let’s see what Microsoft bought, shall we? According to AOL, the 800 patents or so pertain to technology in advertising, e-commerce and search coming from several AOL businesses, active or shut down. A source close to the matter told Reuters that AOL sold patents that it owned through its businesses Netscape, Mapquest, CompuServe, ICQ and Advertising.com, among others.

The IT market is now preparing for a patent craving as Nortel’s and AOL’s auctions are only the beginning. Microsoft did not mention what kind of patents had it bought but as Colin Gillis, analyst with BGC Financial says, the decision was meant to consolidate the company’s standing in the market. “Microsoft, more so than others out there, has been (using) its patent portfolio as a way to generate license fees. This should strengthen that”.