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Microsoft, Amazon Patent Deal Includes Kindle

Microsoft and Amazon announced late Monday that they have signed a broad patent cross-licensing deal that includes Amazon's popular Kindle e-book reader. The companies did not detail what Amazon is licensing from Microsoft (NASDAQ: MSFT).

"The agreement provides each company with access to the other’s patent portfolio and covers a broad range of products and technology, including coverage for Amazon’s popular e-reading device, Kindle, which employs both open source and Amazon’s proprietary software components, and Amazon’s use of Linux-based servers," the companies said in a joint statement.

The deal will result in Amazon (NASDAQ: AMZN) making a cash payment to Microsoft, although the actual terms were not disclosed. Microsoft also referred to "IP issues" but never defined what the statement meant or implied.

Analyst Tim Bajarin said it's curious that Microsoft would make a point of noting that it's licensing the Kindle from Amazon while not detailing why Amazon in turn is the one making payments to the software giant.

"It's unclear what's going on here, but certainly big companies do cross-licensing agreements all the time," Bajarin, president of Creative Strategies, told InternetNews.com. "It sounds like there is Microsoft technology Amazon wants to use in future products, not necessarily for the Kindle.

"From the Microsoft side, maybe they have a future tablet device in mind and the Kindle IP could help them there."

But Bajarin said he'd be very surprised, license or not, if Microsoft did an e-reader that competes with Kindle. "I don't think anyone is thinking about dedicated e-readers anymore given what Apple is doing with the iPad," he said.

Microsoft has a vast repository of patents that it has earned or purchased over the years, and it is not shy about asserting its patent rights in order to defend its IP investments. For instance, last year it forced GPS navigation device vendor TomTom into paying royalties on patents it claims the firm was infringing.

"Microsoft’s patent portfolio is the largest and strongest in the software industry, and this agreement demonstrates our mutual respect for intellectual property as well as our ability to reach pragmatic solutions to IP issues regardless of whether proprietary or open source software is involved," Horacio Gutierrez, deputy general counsel for intellectual property and licensing at Microsoft, said in the statement.

InternetNews.com's West Coast Bureau Chief, David Needle, contributed to this story..

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals.