Microsoft Eases Licensing Terms under Court Pressure

By Caron Carlson  |  Posted 2004-01-23
WASHINGTON—To make it easier for rivals to license its communications protocols, Microsoft Corp. on Friday said it will make several changes to the licensing program, including giving 20 general networking protocols away for free and not requiring developers to visit Redmond, Wash., to evaluate the program.

The changes come as a result of continued criticism that Microsofts compliance with a November 2002 federal anti-trust settlement agreement, particularly the protocol licensing provisions, has not led to envisioned pro-competitive results. Microsoft attorney Rick Rule announced the latest modifications to the licensing program Friday morning to U.S. District Judge Colleen Kollar-Kotelly, in a regularly scheduled meeting at the U.S. District Court for the District of Columbia.

Since the settlement agreement was entered into law, Microsoft has made several adjustments to its compliance efforts, but to date the Department of Justice and the states that had joined the anti-trust litigation are not fully satisfied.

Noting that just 11 companies have chosen to license Microsoft technology through the program, Kollar-Kotelly said that the communications protocol provision of the settlement is one area that is not working as envisioned.

"It appears that this provision has not to date yielded the hoped-for results," she said, after noting that there has been general progress in compliance efforts.

Under the settlement, Microsoft agreed to license 113 communications protocols, and now 20 of those protocols will be made available without charge. According to Mary Snapp, Microsoft vice president and deputy general counsel, some of the 20 protocols are proprietary extensions to public protocols.

"Theyre plumbing," Snapp said. "We selected these 20 in order to make the program more attractive and simpler."

In November, the federal appeals court reviewing the governments antitrust settlement with Microsoft reopened questions at the core of the historic case. Click here to read more.

Microsoft will also simplify the royalty structure by charging a flat fee for six of the 14 available task performance protocols, and it will provide prospective licensees with samples of documentation without confidentiality restrictions so that travel to Microsoft headquarters is not necessary to evaluate the program. Additionally, the licensing agreement itself was cut in half, eliminating approximately 14 pages.

Kollar-Kotelly said that the newly announced revisions must be implemented more quickly than previous revisions. "Time is going by," she said.

Attorneys representing some of the states that joined the settlement echoed the judges sense of urgency, noting that one year already has passed in the five-year decree.

Last week it was disclosed that the Commonwealth of Massachusetts is investigating allegations that Microsoft is planning a campaign against document software programs, such as Adobe Acrobat, along the lines of the campaign waged against Netscape Navigator. Click here to read more.

However, Glenn Kaplan, who represents Massachusetts—the only state that continues to seek more stringent anti-trust remedies—said that that his investigations indicate that the last round of changes made to the licensing program did not solve the problems identified.

"We are not optimistic that [the newly announced changes] will solve the problems," Kaplan said.

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