Microsoft Expands IP Licensing

In another sign that the world’s largest software company is intent on changing its past behavior, Microsoft on Wednesday announced a new policy of expanded access to its intellectual property (IP) portfolio.

The new licensing policy includes royalty-bearing terms (and an expansion of royalty-free access) for the company’s portfolio, which includes over 4,000 patents (with others pending).

It also signals a new openness on the part of Microsoft, which is legendary for keeping a tight grip on its intellectual property, especially its flagship Windows operating system.

But after its landmark antitrust settlement with the Justice Department, that approach has been changing; for example, Microsoft has expanded its “shared source” programs that give select government agencies and academic groups a peek at some source code on some of its key products.

Microsoft said the new IP policy broadens its commitment to providing the academic community with IP under royalty-free terms for non-commercial use.

The first two technologies it discussed as part of the policy
announcement are for using its ClearType font rendering technology and its File Allocation Table (FAT) file system. (See separate story detailing
the technologies).

Company officials said the royalty-bearing license it is offering with the FAT file system would include four licenses and specifications on how it uses the technology. The ClearType font system, which modulates pixels so they appear like a piece of text as opposed to jagged-edged, pixelized
figures, would involve a one-time fee for a lifetime license.

The news comes as Microsoft is working to settle new antitrust charges from the European Commission, as well as meet its legal obligations under the antitrust settlement the company reached with U.S. regulators over how it abused its monopoly status with its desktop operating system.

The antitrust settlement, announced in November 2001, required that
Microsoft provide software developers with access to certain APIs in order to allow the creation of competing products that can utilize the integrated functions Microsoft includes in its own middleware. It also gives computer manufacturers and consumers the freedom to substitute competing middleware on Microsoft’s operating systems.

In addition, open source operating systems are making headway in
enterprise adoption, a clear threat to the dominance of the company’s
bread-and-butter Windows operating system. The latest policy shift is seen by industry experts as a response to the open-source movement.

But Brad Smith, Microsoft’s chief counsel, insisted the new policy was formed in response to requests by customers, partners such as independent software vendors (ISVs) and to a certain extent, government regulators and officials that are adopting common formats in Web services deployments.

“We felt it was important to take this step,” he said. “It is really based on a strong dialogue with a number of other companies in our industry and we felt it was important to incorporate the policy and feedback. By opening up its licensing, Microsoft is allowing other companies to leverage their creativity” for new products, Smith said on a conference call.

The new policy is expected to provide the IT industry with increased access to Microsoft’s IP portfolio at a time when the company has ramped up
its R&D budget. During its 2004 fiscal year, Microsoft is expected to spend
just under $7 billion in its R&D division.

Smith and Microsoft corporate vice president and deputy general counsel,
Marshall Phelps said by making more of the company’s IP available for
licensing for others, Microsoft would create new opportunities for
IT collaboration in the industry.

Joe Wilcox, a Microsoft analyst for Jupiter Research, noted that the FAT
file system licenses could appeal to companies producing devices that
connect to the Windows operating system, such as digital cameras or Flash
storage disks.

In a note on his Microsoft Monitor blog, Wilcox wrote that the progam was consistent with Microsoft’s attempt to improve its
relations with governments and foster more cooperation among technology
trendsetters. (Jupiter Research and are owned by the
same parent company).

Michael Gartenberg, Research Director for Jupiter Research, called the
policy a good move on Microsoft’s part, even though it’s not expected to
increase the company’s bottom-line revenues.

“But it is a move that is going to certainly win them some friends in the
court of public opinion,” he said. “At a time when Microsoft is continuously
under fire for closed systems and not allowing folks access to various
technologies, this gives Microsoft the opportunity to broadly extend its
tech to some other vendors, get some good marks and at the same point, it
helps drive some of these initiatives forward to become industry

Microsoft is also about to release this week more details of its royalty-free licensing for its Extensible Markup Language schemas in Office 2003. The program relates to Microsoft’s new Office 2003 versions of Word, Excel and its
InfoPath back-end, information-gathering programs. The suite uses schemas
, or metadata to describe how information
is stored when documents are saved as XML files.

The Microsoft Office 2003 XML Reference Schemas included in the
royalty-free license include WordprocessingML (Microsoft Office Word 2003), SpreadsheetML (Microsoft Office Excel 2003) and FormTemplate XML schemas
(Microsoft Office InfoPath 2003).

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