Microsoft has been one of several big-name technology manufacturers engaging in protracted patent infringement cases in recent months. However, the software giant has decided to settle its dispute with Barnes & Noble and instead partner with the bookseller to establish a new subsidiary designed to deliver innovative digital publishing solutions.

The joint venture, codenamed Newco in the company's communications, will see Microsoft pledge $300 million in investment for Barnes & Noble's Nook tablet platform in an attempt to close the gap on Amazon and Apple in the market for digital reading technologies.

"Microsoft's investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business," said Barnes & Noble CEO William Lynch.

As the bookseller leverages Microsoft's vast intellectual assets to develop cutting-edge solutions, the software firm will be granted a 17.6 percent equity stake in the new venture. According to eWeek, this royalty-bearing licensing agreement will settle any outstanding patent litigation between the two companies and allow Microsoft to gain a foothold in what is expected to be a dynamic, lucrative market in the coming years.