Microsoft and Salesforce.com agree to settle their respective patent-infringement lawsuits against each other. Those lawsuits threatened to become a protracted legal affair and a symbolic battle over the future of the cloud.
Microsoft announced Aug. 4 that it has settled its patent-infringement cases
with Salesforce.com, marking the end of what promised to be a protracted legal
affair and a symbolic battle over the future of the cloud. Earlier this summer,
companies had filed intellectual-property lawsuits against each other.
With regard to the intellectual property at stake, the terms of the agreement
seemed complementary. "Salesforce.com will receive broad coverage under
Microsoft's patent portfolio for its products and services as well as its
back-end server infrastructure during the term," read an Aug. 4 statement
issued by Microsoft. "Also as part of the agreement, Microsoft receives
coverage under Salesforce.com's patent portfolio for Microsoft's products and
But Microsoft is also being compensated by Salesforce.com, although neither
company disclosed an exact dollar amount. In the wake of the announcement, both
companies' spokespeople took a conciliatory tone.
"We are pleased to reach this agreement with Salesforce.com to put an
end to the litigation between our two companies," Horacio Gutierrez,
corporate vice president and deputy general counsel of Intellectual Property
and Licensing at Microsoft, wrote in an Aug. 4 statement. "Today's
agreement is an example of how companies can compete vigorously in the
marketplace while respecting each other's intellectual property rights."
Salesforce's own statement was much more succinct.
"Salesforce.com is pleased to put this litigation behind us," Jane
Haynes, the company's vice president of communications, wrote in a statement e-mailed
That marks quite a change from May, when Microsoft filed its initial lawsuit
alleging infringement of nine patents, and Salesforce CEO
Marc Benioff, during an earnings call, referred to his new opponent as a
collective of "patent trolls" and "alley thugs."
Salesforce then filed suit against Microsoft on June 24, alleging that
Microsoft infringed on five of its patents, and the
conflict between the two companies seemed on-track to become a true battle
royale. Salesforce also retained David Boies-who originally represented the
Justice Department in its landmark suit against Microsoft-as counsel.
A number of analysts felt the animosity between the two companies
highlighted the growing importance of the cloud for both the enterprise and
"The stakes are getting bigger and bigger," Ray Wang, an analyst
with the Altimeter Group, said to eWEEK in a June 28 interview. "In the
battle for the cloud, the two leaders are going to be Salesforce and Microsoft.
Microsoft's Azure is on the .NET side of the
war, while Salesforce is the Java side. So you're going to have drama."
Wang also felt such conflicts are a mark of the cloud's growing popularity.
"This is going to continue; it's part of doing business here in the
Valley," he said. "Litigation is part of the process as things get
ultra-competitive. As the lines between enterprise and consumers blur, that
means a huge volume of users, and that's the key here in many ways."
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.