AOL Inc. (AOL), the New York-based Web portal, has started a $400 million stock repurchase as part of a plan to return funds to shareholders from a $1.1 billion patent sale.

The company is buying the stock using a so-called Dutch auction tender offer, AOL said today in a statement. The deal brings the total amount that AOL plans to return to shareholders this year to $1.1 billion.

AOL, facing a slump in sales, agreed in April to sell and license patents to Microsoft Corp. (MSFT) The Internet company is selling more than 800 patents and related applications to Microsoft and will grant the software maker a nonexclusive license to its retained patent portfolio. AOL still holds more than 300 patents and applications following the transaction.

The move helped propel AOL’s stock price this year, contributing to a 81 percent gain in 2012. The shares were little changed yesterday, closing at $27.31.

To contact the reporter on this story: Nick Turner in New York at nturner7@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net