Microsoft Shares a Bit More Source

By Peter Galli  |  Posted 2003-12-03

Microsoft Shares a Bit More Source

Microsoft Corp. is streamlining its licensing programs in a move designed to make more of its intellectual property portfolio broadly available to its partners and competitors.

The Redmond, Wash., software giant on Wednesday will also announce two new IP licensing programs: one for its ClearType technology, which allows text to be read on an LCD monitor in a crisper way, and the other for Microsofts File Allocation Table (FAT) file system. Other companies now will be able to build their own implementations of ClearType and bring it out on other platforms and non-Windows devices under the terms of the license, which is not being made available.

Brad Smith, Microsofts senior vice president and general counsel, and Marshall Phelps, a Microsoft corporate vice president and deputy general counsel for intellectual property, will announce these moves at a media teleconference Wednesday morning.

In an interview with eWEEK ahead of the teleconference, Phelps said the new policy deals with both royalty-bearing and royalty-free use of the companys intellectual property, and will be a balance of both. But he stressed that Microsoft has no intention of licensing these, or other, technologies to the open-source community on a royalty-free basis as "our goal is to treat everyone the same way."

"The point is that pricing has to be consistent and we cant treat one class of competitors differently from another and still have a rational licensing program going forward," he said.

David Kaefer, director of business development in Microsofts IP licensing group, told eWEEK that Microsoft feels its intellectual property has value and the test of that will be if people take licenses.

"The proof is in the pudding, and this is the first step for us. We very much want to create these programs in an attractive way at a price point that is viewed as valuable, and the proof will be whether people take it up," he said.

Phelps added that there will also be an expansion of Microsofts efforts in areas where the IP it puts out is not priced. "The standards and academic worlds are both part of that scenario, and there will be other scenarios where sharing it is in the general good. But we are not going to give it all away for free—that is not the goal," he said.

Next page: Is Microsoft at an inflection point?

More Mature Microsoft


Phelps, who has been with Microsoft for just six months, agreed to take his current position after Chairman and Chief Software Architect Bill Gates told Phelps that he believes Microsoft is at an inflection point in its history.

The company is maturing and needs to interface with the broader world differently than it has in the past, Gates said. Phelps said he was convinced that with Microsofts huge annual research and development spending, it could open up its technologies and intellectual property on a broad basis under a transparent, reasonable, open approach.

That approach will hopefully create a different Microsoft over time and also change the relationships toward Microsoft, he said.

"We have been getting more requests for our IP and decided to figure out a way to honor those requests by licensing our portfolio under clear, commercially reasonable terms that will hopefully see our technologies pushed out into the larger technology ecosystem," he said.

Kaefer said the hope is to streamline the existing IP stuff under one framework, making it easier for customers and partners to approach Microsoft for licenses by having one group in charge with a central Web site.

On the royalty-free side, Microsoft will continue to reiterate commitments in that regard, particularly to ISVs and toward standards. Microsoft also will expand bona fide academic institutions access to its patent portfolio, giving them access to 100 percent of patents for non-commercial academic research.

Next page: Is antitrust settlement behind Microsofts moves?

Microsofts Motivation

Asked whether these moves will result in a significant increase in Microsofts monitoring and compliance, Kaefer said that will not be the case and the companys approach in general is to make this as simple as possible.

"Patents, as a form of IP, rewards innovation and broadens the base of public knowledge. All of our patents are already today public knowledge as we detail these in the patent applications. So, by providing royalty-free access to the portfolio we are not giving any new information per se; we are just clarifying the rights they have going forward to work with that information," he said.

There are also other forms of IP, including trade secrets and technical know-how, which are shared in other, more restrictive ways through programs like Microsofts Shared Source programs, he said. But the latest moves give people a clear way of licensing that technology and implementing on top of it.

"Our intent is to pretty broadly license. Our patent policy will say that, and we already do license a substantial portion of our patents via cross-licensing agreements with companies like Cisco Systems [Inc.] and Hewlett-Packard [Co.]. We are, in some ways, reinventing the wheel as our IP portfolio has grown and people are more interested in it," Kaefer said.

These moves are not expected to be particularly material to the financial well-being of Microsoft, according to Phelps. "Thats not our goal. Our goal is to find ways to work better with those core communities and to put a responsible program together that benefits us all," he said.

Asked whether the motivation for these changes was the antitrust settlement with the government, Phelps insisted that it was not connected to that action.

But when pushed about the unhappiness around the protocol licensing aspect of that settlement, he conceded, "It does factor into the question of whether we have developed a rational program that people want to take advantage of.

"Thats a different point, and I think we have done that and will do that," he said, stressing that he was hired to do this before the antitrust settlement was reached.

Microsoft is dramatically increasing its patenting efforts, he said, and the company now has 4,000 patents worldwide and some 5,400 pending. As such, Microsoft is taking a serious look at how it can optimize that for the benefit of licensees, he said.

Asked about the competitive threat of making its technologies and patents widely available to its competitors, Phelps said there naturally are some trade secrets that will be kept within the company. Microsoft will also not license the "look and feel" technologies that uniquely identify its products. "But we are going to be more open and expansive than not," he said.

Some competitors, however, are suspicious of the move. Jonathan Schwartz, executive vice president of software at Sun Microsystems Inc., in Santa Clara, Calif., told eWEEK he will take a look at the licenses, but doesnt expect much.

"Microsoft is notorious for using the word open and then delivering a multipage licensing agreement," he said, adding that Sun has no interest in having to pay Microsoft "punitive royalties."

"If they really want to make it open, they should use a royalty-free license like the one we use for StarOffice. Microsoft is feeling very threatened and vulnerable at this point. We have just passed more than 50 million downloads of StarOffice and OpenOffice, and I think the reticence of large organizations to continue licensing Microsoft Office is due to the fact that it is a closed and very expensive product.

"Microsoft is using any spin they can at this point, and I would be stunned to see anyone take them up on these latest licenses," he said.

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