In the end, Barnes & Noble had little choice but to knuckle under to Microsoft. Not only is BarnesandNoble.com losing money, it faced the prospect of a crippling patent fight with one of the most cash-rich companies on the planet. Microsoft sued B&N last year, claiming the Android-based Nook e-reader violates five of its patents. Microsoft, as it has done with so many other Android and Linux device makers, made Barnes & Noble an offer it couldn't refuse.

Now Barnes & Noble can go forward with its e-book strategy without fear of legal reprisals from Redmond. Under a deal announced Monday, the bookseller will spin off its e-book and reader business into a new subsidiary, in which Microsoft gets a 17.6% stake. In exchange, Microsoft will pay Barnes & Noble $300 million and drop its patent claims.

But, as there is often with deals involving Microsoft, there's a catch. The new, yet-to-be named subsidiary (for now it's just called NewCo), must pay license fees to Microsoft for technologies covered by patents at issue in the lawsuit. Barnes & Noble was already likely selling its Nook e-readers and tablets, made by Foxconn, at a loss in order to get its digital storefront into as many hands as possible--now it will lose even more on each device sold.

[ Do software patents do more harm than good? See Should Software Patents Be Abolished? ]

Microsoft is the clear winner here. It has, in essence, won its lawsuit against Barnes & Noble without ever having to go before a jury. And it gets a significant stake in the only part of B&N with any real growth potential, and it will get a piece of the action on every Nook sold.

Don't underestimate that last perk. It's hard to know how many Nook devices Barnes & Noble is selling because it won't disclose those numbers. Likewise, we don't know how much in licensing fees NewCo will pay Microsoft per Nook. But we can make some educated guesses.

iSuppli estimates that Barnes & Noble sold 1.9 million Nook tablets in the fourth quarter. That doesn't count other Nook products, like the Nook Color or Nook Simple Touch. Meanwhile, analysts' estimates of the licensing fees Microsoft gets from other Android device makers, including HTC, Acer, and ViewSonic, vary from about $5.00 to $15.00 per unit. So a highly conservative estimate has Microsoft making about $15 million per quarter from this deal in license fees alone.

That doesn't include proceeds from profits earned by Barnes & Noble's lucrative college textbook business, which is going digital and is being rolled up into NewCo.

Barnes & Noble, with its majority stake in NewCo, is still stuck with a business that lost $233 million over the past nine months and saw operating expenses balloon as it tried to keep pace with Amazon and Apple. "Microsoft coming in here really does very little for Barnes & Noble," noted Fusion Analytics analyst Josh Brown, in a CNBC interview Monday.

So how did Microsoft get such a sweetheart agreement? The same way it got licensing pacts that cover 70% of Android devices on the market. The company's vast patent trove, and vast army of lawyers, allows it to do deals on its terms, or else. It also explains why it was willing to pay more than $1 billion for 800 AOL patents, even if it did flip most of them to Facebook. "This is part of a broader trend at Microsoft, to force these strategies and these partnerships without going out and doing an acquisition," said BGC analyst Colin Gillis, also on CNBC.

Microsoft can't be blamed for using its intellectual property assets to get the best deals it can. It's in business to make as much money as possible for its shareholders and that's what its management is paid to do. And Microsoft isn't the only one playing this game. Google is amassing its own patent stockpile as it too embraces a competitive strategy based on MAD (mutually assured depositions). It recently agreed to pay $12.5 billion for Motorola, mostly for the company's 24,000 mobility patents.

But the fact that patents are becoming less about protecting innovation, and more about giving industry giants a cudgel with which to bludgeon rivals? That may be an argument for patent reform. As a starting point, the United States Patent and Trademark Office might consider rules that would require companies that amass patents to legitimately use them--or lose them.

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