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Microsoft Extends Embedded Indemnification

As the mobile and embedded industry continues to face various intellectual property and patent challenges, Microsoft is upping the indemnification ante it offers its partners.

Microsoft Embedded and Windows Mobile OEM partners and distributors will now enjoy the same level of protection that other Microsoft platform partners have benefited from.

Microsoft claims that the new protection is not being driven as a direct result of recent alleged patent-infringement suits that have been filed against Microsoft.

The extended indemnification protection now provides Windows Embedded and Mobile OEMs and distributors with defense against IP claims in all of the counties that Microsoft serves.

It also removes the monetary cap for defense costs and provides protection of patent, copyright, trademark and trade-secret claims related to Windows Mobile and Windows Embedded software.

At the end of 2005, Visto, a company partially owned by Research in Motion's patent nemesis NTP, filed suit against Microsoft alleging that Windows Mobile 5.0 infringes on three Visto-awarded patents.

But David Kaefer, director of business development for the Intellectual Property and Policy group at Microsoft, said that Visto was not the impetus for the protection extension.

"I don't think that any one lawsuit or circumstance is driving us towards making this announcement," Kaefer told internetnews.com. "We have about two-dozen patent suits today that we defend against.

"Is it the Visto response? No, " Kaefer continued. "This is something that is specific to the amount of time it takes to deal with the unique needs of this segment."

Kaefer explained that Microsoft has been working on adding the additional protection since May and that the delay is due to differences between the embedded space and the rest of Microsoft's product portfolio.

Embedded devices manufactures like to have a lot of say and control about how they shape and even modify software to make it fit on devices. The potential for modification is what makes it the indemnification a bit tricky.

Microsoft has now figured out a solution. According to Kaefer, the simple notion is that source code that Microsoft ships is covered to the extent that if the embedded distributor adds their own source code, that is not covered.

The extension of indemnification for Mobile and Embedded partners is particularly an advantage because of the high costs of dealing with potential infringement issues.

"Many companies that have experimented with building their own software have realized that it puts them in charge of managing the IP cost and risk," Kaefer said.

In the buy versus build decision, the added benefit of indemnity is a significant value add in Kaefer's view.

Microsoft's protection is also noteworthy in that it extends to all of its partners, regardless of size.

"It is common practice in the industry for some partners to get better indemnifications than other partners," Kaefer said. "The message that we're sending is that from our biggest partner to our most modest-sized partners, you will all get one level of standard indemnification."

Microsoft began its more widespread indemnification efforts originally back in 2004. IDC and Forrester Research shortly thereafter lauded its efforts as being industry-leading.

The mobile and embedded spaces remain fiercely competitive, with Microsoft, according to some, leading the pack.

Linux is hardly a slouch in embedded and remains a competitor to Microsoft. A recent study reported that the embedded Linux market is valued at $100 million dollars a year.

Linux has of course come under intellectual and patent scrutiny from SCO in recent years; though Linux vendors have all, to some degree, offered indemnification to their users, as well.