Licensing Under Fire

Court decrees Microsoft can't sublicense patents; SQL Server 7.0 developers may have to pay fees.

Software licensing, ever a sticky subject, has of late been getting stickier still for Microsoft Corp. SQL Server customers. In February, a Washington state Superior Court judge decreed that some SQL Server 7.0 developers could be liable to pay additional licensing fees, stating that Microsoft could not sublicense patents of another company—Timeline Inc.—to SQL Server customers. The Timeline technology in question involves two SQL Server components: a database within SQL Server known as the analyst services cube, and DTS (Data Transformation Services), which controls data import and transfer into the relational database side of SQL.

According to the court, every Microsoft customer, including ISVs, VARs and corporate end users, who wishes to customize SQL Server by adding code or products to meet user needs would need a license from Timeline to do so. The potential economic benefit to Timeline could be staggering, the court said, in that it would entail the future sale of licenses to essentially all Microsofts SQL Server customers.

Microsoft has been quiet on the issue. Jim Desler, a public relations manager for the Redmond, Wash., company, said Microsoft is dealing with the issue on a case-by-case basis as its customers and partners inquire into it.

Since the case unfolded, some users have reacted with surprise, alarm and displeasure at Microsofts lack of communication on the issue. One SQL Server user, Darren Larson—a consultant in the IT group of a large construction and engineering company in Richland, Wash., that he declined to name—said SQL Server isnt worth paying extra licensing fees for.

"If Timeline starts looking for royalties or extra money, were not going to play their game. Unless its something like a thousand bucks or something reasonable," Larson said. "We decided ... if they start charging extra for DTS, well either go back to BCP [Bulk Copy Procedure, the technology SQL Server 6.5 employed to do data imports and transfers prior to DTS], or we might start using Linux more for servers or maybe [IBMs] DB2."

Extra fees associated with SQL Server strikes at the heart of its relative affordability when compared with competitors databases: DB2 and Oracle Corp.s Oracle9i. "Part of the reason for going with SQL Server was that it was reasonably priced and cheaper than Oracle and had cool features like DTS," Larson said.

Who should worry? Even that seemingly simple question is tough to answer. Steve Foote, a consultant with Enswers Inc., in Cambridge, Mass., isnt convinced that many users will be affected because he interprets the court decision as covering only SQL Server 7.0 licenses upon which DTS and cube functionality have been built. "Theres not a lot of applications that are still running on SQL Server 7 today," Foote said. "Most organizations laid down the law that they would move to 2000 at least a year or two ago, and they would have moved up to SQL Server 2000 at the same time they moved to Windows 2000. If youre a developer house, theres no way that a year ago you would have been on [SQL Server 7.0]."

Others arent so sure. Whats keeping Microsoft quiet on the issue is confusion as to the nature of what would constitute infringement and who would be affected, said SQL Server Product Manager Sheryl Tullis. "It could be much broader than just a version or just a product or vendor," Tullis said. "Timeline hasnt provided any clarity in what is the scope of its patents. They own those patents. Theyre the ones who have to figure it out."

The $64,000 question is, how far will Timeline go to pursue licensing fees? The company has already taken Oracle, Hyperion Solutions Corp. and Sagent Technologies Inc. to court on the basis of similar patent issues.

Based on that history, Microsoft officials view the company as a voracious fee seeker. "What Timeline has said is they think the patent should be applied broadly across the industry," Tullis said. "Weve seen that as far as whom theyve taken to court."

Charlie Osenbaugh

Timeline officials demur. CEO Charlie Osenbaugh (pictured) said there is a "small subset of users" likely to be liable for patent infringement: those who use the two technologies in question—the analyst services cube and DTS—and those who write code that provides the same features and functions.

Osenbaugh said that the company hasnt yet figured out how to get its fees from users and others involved in the Microsoft case but that officials want to come up with "a sane approach" to getting its licensing fees paid. "We dont want to put [users] through the pain and cost of switching databases," said Osenbaugh, in Bellevue, Wash. "Were not out to gouge people."

According to Osenbaugh, the company has discussed a number of options, including an amnesty program in which it would publish a rate schedule for those who step forward voluntarily.

Theres one thing Microsoft officials, Timeline officials and lawyers agree on: SQL Server users should comb through code to determine if theyre at risk of being dragged into court. "End users need to determine if they have an infringement problem," said Bob Rohde, of the Seattle law firm Rohde & Van Kampen PLLC, which was retained by Timeline in the Microsoft court case.

If companies determine there may be grounds for patent infringement, Microsoft officials are advising them to take it up with Timeline. "If a company looks at their technology and thinks theres an issue, they should have a patent review and discuss it with Timeline," Tullis said. "Were telling them that on a case-by-case basis."

As far as who the first target of litigation might be, Rohde said he will be meeting with his client in mid-April to assess "whos out there, whos infringing and who hasnt taken a license."

That assessment is fairly simple to make, he said, often involving poking around in online documentation and downloading manuals to determine if infringing technology is incorporated into companies software. "My clients got a fairly good idea of whos out there using his technology," Rohde said.