The tech world's patent wars continue and Microsoft is bent on building up its armoury by securing hundreds of patent rights from former internet titan, AOL Inc.

In a statement, AOL Chief Executive Tim Armstrong said on late Monday that Microsoft got the upperhand over other tech giants on the more than 800 patents that the company offered in what it called as a "full-blown dynamic auction."

Microsoft, according to Reuters, has edged out the bids pushed by rivals like Facebook, Google, eBay and Amazon by plunking offers that breached the $US1-billion mark.

Major catches of the patents include the technology rights deployed in the operations of AOL-owned entities Netscape, ICQ and MapQuest to CompuServe, Advertising.com and others, Reuters wrote, citing an unnamed source.

The patents auction, Mr Armstrong said, was commenced in 2011 as approved by the AOL board and Microsoft emerged as the winner when the sale was officially closed April 5.

Microsoft has been formally notified of the auction results, according to Mr Armstrong, who added that he personally contacted Microsoft Chief Executive Steve Ballmer to break the news.

The deal, AOL said, will allow the Internet pioneer to keep substantial control of key patents that were identified with its strategic operations, which include advertising, search and social media.

Up to 300 patent rights will be retained by AOL under the deal, Mr Armstrong told Reuters.

But the company will still enjoy licencing rights on the rest of the patents that Microsoft will acquire, he added.

In exchange, Microsoft will be granted licensing rights that AOL will keep though Mr Armstrong noted that the arrangements will not be exclusive, meaning other firms can still contract licencing rights from AOL.

Analysts viewed the deal as largely advantageous for AOL, which has been struggling in recent years following its dominance as America's email account and Internet service providers during the 1990s.

The price tag surprised Benchmark analyst Clayton Moran, who told Reuters that the market had "anticipated little to no value for the portfolio - a few hundred million at the most."

Also, Barclays Research analyst Anthony DiClemente lauded AOL for facilitating an auction that clearly gravitated to its favour.

"We think this move is a big win for AOL in both the speed at which the sale was made and the actual amount it received," Mr DiClemente was quoted by Reuters as saying.

AOL, in fact, is set to reap financial gains from the deal as it informed regulatory officials that in the event the deal collapses for any reason, Microsoft could be required to make termination payments of up to $US211.2 million.

Mr Armstrong has indicated that a big chunk of the earnings from the deal would be distributed to AOL shareholders.

Tech firms have been scrambling to acquire patent rights that according to James Bessen of Boston University have become 'legal weapons' for firms that in the recent months have attracted strings of lawsuits.

"Patents have become legal weapons. They're not representing ideas anymore," Mr Bessen told The Associated Press on Tuesday.

Legal cases fought and being fought between Apple and Samsung highlighted the new complications that have emerged in conducting business in the tech world, which prompted giants like Google, Facebook and Microsoft to bolster their patent 'reserves'.

On one hand, Google is currently in the process of completing its more than $US12-billion purchase of Motorola Mobility, primarily paying a big sum on the thousands of patent rights that Motorola owns.

Apple and Microsoft, on the other hand, teamed up with other tech firms that comprise a consortium in wining the 6,000 Nortel Networks patents that fetched from the group some $US4.5 billion.