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Microsoft (Nasdaq: MSFT) announced today that it would extend the intellectual property protection program it gives channel partners and PC manufacturers. The software giant said it would foot the bill for legal costs associated with any lawsuits related to Microsoft trade secrets, patents, copyrights or trademarks.
It will also pay damages awarded and settlement fees based on the amount the OEM or software builder has paid for products.
SCO Suit
Indemnification became a hot-button issue when, in March 2003, the SCO Group sued IBM (NYSE: IBM), claiming the version of Linux the company was selling contained lines of SCO's proprietary UNIX code. SCO went on to threaten IBM customers who were using Linux. The open source community vehemently denies the claim.
"Microsoft is taking advantage of the perception in the market of the uncertainty around the possibility of alleged intellectual property infringement in the future," Stacey Quandt, principal analyst, Quandt Analytics, told TechNewsWorld.
"Microsoft is demonstrating the ability to reduce the risk of IP infringement," she added.
While some analysts believe Microsoft is making a show of pushing back against Linux and the companies who sell Linux products and services, Quandt said indemnification has value for all in the software industry.
Hewlett-Packard (NYSE: HPQ) and Novell offer limited indemnification programs, but "Microsoft's indemnification may help its partners and customers sleep better at night, but the potential for closed source and open source intellectual property infringement are the same," she said.
Legal Woes Disrupt Business
Those risks are increasing, one analyst said.
"The market is changing and channel partners need to pay attention to what's happening in the software industry in the area of intellectual property management," Stephen Graham, group vice president, IDC, said in Microsoft's press release.
"Even if a partner believes it is an unlikely litigation target, business disruption can still result from a legal dispute regarding a key supplier's IP. To protect their own interests, partners should make sure they understand the degree of IP protection and the resources available to them from the vendor should an infringement issue arise."
Intellectual property issues have become more complicated as the software industry has grown.
"The business process is changing and increasingly innovation comes from collaboration in open community rather than a single company," Quandt said. This can lead to questions over who owns the code and whether proprietary gets mixed into open source programs.
The expanded program covers current and future versions of software, such as Windows Server System including Microsoft SQL Server and Microsoft Exchange Server, Microsoft Office System and Windows client software, Microsoft said.
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