Intel has entered into a $120 million deal with RealNetworks, with the chipmaker acquiring 190 patents, 170 patent applications and a video codec development team -- and the software company retaining “certain rights” to use their existing and future technology.

As a tech geek first, a student of intellectual property second and a rank amateur when it comes to the labyrinthine details of the business world, I’m dissatisfied with my understanding of the terms of this deal.

I can see where Intel might be interested in buying RealNetworks’ remaining supply of valuable patents. Apart from the handful of websites that still use RealVideo, Intel is more interested than ever in video applications, and “plans to use RealNetworks’ technology to improve its products for laptops and smartphones,” writes Ian King for Bloomberg, “bolstering its mobile technology as it pushes its chips into the smartphone market.”

I can definitely see RealNetworks in the market to sell. In the late 1990’s, the company was possibly THE major player in online multimedia applications. Ten years later, the RealAudio and RealPlayer names were already becoming rarely seen by most surfers. After three straight years of declining sales, the Q3 2011 report showed the company with less than half of the cash assets reported at the end of 2010 (from $236 million to $102.8 million).

I’m less sure what is meant by RealNetworks’ right to “use” the patents, especially since they’ve turned over ownership and the development team.

“You’re basically selling the building that you occupy and then you’re leasing it back,” said Thomas Nielsen, RealNetworks President and CEO, to GeekWire. “I think we can go the distance on our own, in terms of forming partnerships like we did with Intel, which I am much more attracted to than trying to offload the company.”

Following the announcement of the Intel deal, RealNetworks shares rose nearly 30% to $9.55, the most sizable upward movement since, well, the turn of the century. Intel shares rose almost imperceptibly, which also makes perfect sense to me.

The signing of a “memorandum of understanding to collaborate” implies to me that Intel expects to benefit from (and possibly contribute to) any patents that RealNetworks may establish in the future. Meanwhile, one can make a case that RealNetworks is having a ‘Kodak moment’ (please excuse the pun), and making a perhaps inevitable transition to the status of non-manufacturing entity. RealNetworks has sold its video codec R&D to Intel, and ‘leased’ the right to collect on existing patents as well. Without technically becoming counted as nothing more than one of Intel’s assets, what exactly does that leave for RealNetworks?

““RealNetworks has so many businesses that, if I were to give you the elevator pitch of what we do, it’d better be a very tall building,” Nielsen told GeekWire. When asked what the company will do with Intel’s investment, he replied: “It’s probably about 90 to 120 days too early to where I can give you details. If I started hinting at it, you’re a smart guy, you’d be able to figure that out, and the people who keep me out of the orange jumpsuit would not like that… But seriously, it’s a wonderful question...”

I detect a distinct Silicon Valley approach here. Between boundless and ambiguous enthusiasm, patent overvaluation and profit-agnostic investment, RealNetworks could be looking to become the next Pandora. The only problem is that investors’ worst fear is that Pandora will only become the next RealNetworks.

PCMag’s Marc Hachman, in what I can only interpret as dry irony, explains that ‘unlocking the value of the patents’ is “a term used by other tech companies wishing to transform their patent portfolio into cash... RealNetworks began unlocking the value of its Rhapsody music business and its video game business in early 2010, spinning both of those businesses off.”

RealNetwork still owns the GameHouse division (according to the ©2012 on the site, and the terms of service last updated in July 2011), and the company might be seeing some Zynga-style action from social media integration. If RealVideo has been spun off in the GameHouse sense, then RealNetworks gets to at least pretend to still have a product, and possibly realize SOME revenue from the division. Possibly.

On the other hand, we can probably assume that RN derives little to no utility from whatever stake they may retain in Rhapsody-- virtually the company’s only high-visibility product since the turn of the century. With the ‘spin off’, there is little doubt that Viacom was shedding RealNetworks, not the other way around -- as evidenced when Rhapsody decided to cease paying for the use of RealNetworks’ DRM patent (to the dismay of many subscribers, who thereby lost support for a number of ‘grandfathered’ RAX-format purchases). If RealVideo has been spun off in this sense, then Intel is simply being charitable in calling it an “understanding”.

I must admit being left with more questions than answers. Is Intel actually getting the rights, or partial rights, to future RealNetworks patents? If so, how common is it for companies to purchase future (i.e., unrealized) patents -- and why does Intel obviously find RealNetworks to be so much more attractive of a prospect than the evidence might suggest?