Fortune reports that Microsoft is taking a hard look at various free and open-source software (FOSS) and is planning a strategy to assert patent claims. Many large companies use such software in various applications across the enterprise.
Microsoft General Counsel Brad Smith and licensing chief Horacio Gutierrez sat down with Fortune recently to map out their strategy for getting FOSS users to pay royalties. Revealing the precise figure for the first time, they state that FOSS infringes on no fewer than 235 Microsoft patents.
Mr. Smith has been aggressive in building up Microsoft’s patent portfolio. When he became general counsel in 2002, the company filed 1,411 patent claims; in 2004 it submitted 3,780.
There were three options for the Microsoft GC regarding potential infringement:
First, it could do nothing, effectively donating them to the development community. Obviously that “wasn’t very attractive in terms of our shareholders,” Smith says.
Alternatively, it could start suing other companies to stop them from using its patents. That was a nonstarter too, Smith says: “It was going to get in the way of everything we were trying to accomplish in terms of [improving] our connections with other companies, the promotion of interoperability, the desires of customers.”
So Microsoft took the third choice, which was to begin licensing its patents to other companies in exchange for either royalties or access to their patents (a “cross-licensing” deal). In December 2003, Microsoft’s new licensing unit opened for business, and soon the company had signed cross-licensing pacts with such tech firms as Sun, Toshiba, SAP and Siemens.
Microsoft has not said whether it will pursue litigation over alleged FOSS patent infringement. If it does, expect the IP practice areas of major firms to get very busy.