Microsoft Gives IP Indemnity to Its Embedded System OEMs

By Peter Galli  |  Posted 2006-02-09

Microsoft Gives IP Indemnity to Its Embedded System OEMs

Microsoft has moved to strengthen and broaden the intellectual property protections it offers those original equipment manufacturers and distributors across the globe that build and sell devices powered by its Windows Embedded and Windows Mobile software.

The Redmond, Wash. based software maker will announce Feb. 9 that this strengthened IP protection now includes the defense of OEMs and distributors against IP claims in every country Microsoft distributes or markets its Windows Embedded and Windows Mobile products; protection of patent, copyright, trademark and trade secret claims based on that software; and the removal of the monetary cap related to defense costs.

That move brings the IP protections provided to the more than 4,000 OEMs and distributors of Microsofts embedded mobile software, which is used in phones, ATM machines, retail point-of-sale systems, GPS systems, industrial robots and thin clients, in line with those already offered for Microsofts server and client products, partners and customers, David Kaefer, the director of Microsofts Intellectual Property Licensing Group, told eWEEK in an interview.

The move was welcomed by Boris Metlitsky, the senior vice president of product strategy and development at Symbol Technologies, who said that this is another tool to speed up the deployment of its latest enterprise mobility solutions and provide its customers with technologies that increase their competitiveness in their respective markets.

"By extending IP protection to the embedded and mobile device manufacturing space, Microsoft is helping ensure the integrity of our offerings and is allowing us to focus on the next wave of innovations," Melitsky said in a statement.

This latest move was part of Microsofts long-term plan to standardize its indemnification for channel partners and end customers, Kaefer said, adding that the process has been under way since 2003, when Microsoft removed monetary caps for its volume licensees and customers, after hearing that this was the top customer satisfaction issue for them.

"Then, in November 2004, we offered all customers the level of indemnification we were offering our volume licensees. We then switched gears into the partner community and realized that we had all these varying levels of indemnification depending on whether you were an OEM or a system builder or an ISV partner, and by last summer we had brought just about everyone up to one common bar, but we had difficulty slipstreaming in a lot of the folks in the embedded world," he said.

Read more here about Microsofts move to indemnify its PC OEM partners against IP attacks.

The biggest challenge for Microsoft with regard to the embedded market was that it needs great flexibility in the type of software it puts on devices and often needs to modify that software, in large part because many of the devices had small footprints and the software has to be fitted onto that.

"This speaks to why indemnification is so important for this channel: It is one where we allow changes to our software and this makes offering indemnification more challenging," Kaefer said.

Partners were covered under this latest indemnity unless "the partner alters a piece of source code and that piece of source code is the basis of an infringement claim. While the partner is still indemnified for all the unmodified source code, Microsoft does not indemnify them for the modified source code," he said.

This was reflected in the language used in the indemnity policy, which states that Microsofts obligations "will not apply to the extent that the claim or adverse final judgment is based on … your altering the covered software," Kaefer said.

So, if a partner alters source code block X and then an IP holder makes a claim that source code block X infringes its rights, this would not be covered because the partner has authored the allegedly infringing code and not Microsoft, he said.

Next Page: Taking a leading position.

Taking a Leading Position

Microsoft also believes it has now taken a market leading position in this regard, especially when compared to the indemnification offered by other device software makers and the open-source or Linux brands, Kaefer said.

However, Hewlett-Packard Co., Novell Inc. and Red Hat Inc. have all made moves to protect their enterprise Linux customers.

Red Hats Open Source Assurance Plan is designed to protect customers Linux investments and ensure that they are legally able to continue to run Red Hat Enterprise Linux without any interruption.

Novell, of Provo, Utah, set up a Linux Indemnification Program for its SuSE Enterprise Linux customers, under certain conditions, to protect against IP challenges to Linux and help reduce the barriers to Linux adoption in the enterprise, while HP will indemnify its customers against any legal liability from the use of Linux.

To read more about HPs Linux indemnification program, click here.

"I think of a device maker building a device with software that is not indemnified is like building a boat without life preservers," said Jason Stolarczyk, marketing manager for Microsofts Windows Mobile and Embedded group. "This is an extra level of insurance from us for folks to feel confident in building devices that meet the requirements of their customers."

Several high-profile IP disputes, most notably that of BlackBerry maker Research in Motion, had increased the awareness of the need for indemnification among partners and enterprise customers.

"They were now being offered the assurance that there is a single point of responsibility, and that is Microsoft," he said.

Click here to read more about the possible RIM shutdown.

Stolarczyk said that Microsoft was taking the market leadership on the IP indemnification front and "we are hoping that others see the value in that and that other software makers see that this is something companies are going to be requesting."

Rob Enderle, the principal analyst for the Enderle Group, agreed, saying that Microsofts indemnification was one of the most comprehensive in the market and set a high bar for competing platforms.

"Intellectual Property litigation has been increasing steadily for the last several years. As a result, indemnification against this litigation not only has become a requirement for any technology purchase, it strongly pushes companies towards the buy side of the build versus buy decision," he said.

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