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Intel pays $120M for RealNetworks video patents, software

Intel buys more video clout with "foundational" patents and next-generation encoding software. Video is spreading to every sort of gadget, and it's a market with abundant patent challenges.

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Intel is buying video patents and software from RealNetworks for $120 million, giving the chipmaker new muscle in a market that's increasingly important but filled with intellectual-property obstacles.

RealNetworks is selling about 190 patents, 170 patent applications, and its next-generation video encoding technology in the deal, the companies announced today.

Intel called some of the patents "foundational," indicating its belief that some are important to the ever-hotter area of digital video. Codecs such as H.264 or Google's VP8 are used to encode and decode video, a task that's crucial in videoconferencing, gaming, and entertainment. Intel gets RealNetworks' next-generation codec as part of the deal, and both companies pledged to work together for future development.

"We believe this agreement enhances our ability to continue to offer richer experiences and innovative solutions to end users across a wide spectrum of devices, including through Ultrabook devices, smartphones, and digital media," said Renee James, general manager of Intel's Software and Services Group, in a statement.

Intel's software group has been steadily bulking up over the years, with thousands of employees, but it focuses more on behind-the-scenes software such as game engines and programming tools than branded products ordinary people use. It's also got a stake in the operating system market through its 2009 acquisition of Wind River, which among other things helps companies build devices with Google's Android operating system. With Android phone makers and other technology companies engaged in a multitude of patent wars right now, patents have become suddenly more valuable.

On the other side of the deal, RealNetworks gets cold, hard cash. Chief Executive Thomas Nielsen said it gives the company an opportunity "to boost investments in new businesses and markets while still protecting our existing business."