Microsoft Open Policy Faces Scrutiny

Brad Smith, Microsoft's general counsel, decided it was time to make peace.

That's one reason, according to Horacio Gutierrez, Microsoft's deputy general counsel and vice president of intellectual property and licensing, that the company began opening up to the rest of the software industry following the U.S. antitrust case. "He set out ... to start opening doors and mending fences with a number of key industry partners," Gutierrez said in an interview.

That desire to make peace was the spark that, combined with some other factors like enterprise use of multiple vendors, ultimately led to the cross-licensing deal with Novell and the launch of Microsoft's interoperability principles earlier this year, he said. The principles describe a greater commitment by Microsoft to support industry standards, promote data portability and open up connections for interoperability with other software. The company initially published more than 30,000 pages of documentation for Windows client and server protocols that were previously only available for license.

But Microsoft may have a way to go to placate a market that often views the software giant as a bully not to be trusted. The fact that the market tends to scrutinize every move that Microsoft makes, looking for ulterior motives, may make it even harder for the company to overcome market skepticism.

For example, Microsoft describes its interoperability pledge as being driven by customers who increasingly use products from different vendors.

But it wasn't hard to conclude that "everything they talked about in that pledge was a direct response to the E.U.," said Matt Rosoff, an analyst with Directions on Microsoft. About a week after revealing its interoperability principles, Microsoft was fined US$1.3 billion by the E.U. Its new pledge then seemed even more obviously a way for it to try to avoid such heavy fines in the future, Rosoff said.

Likewise, Microsoft promotes its efforts to sign cross-licensing deals, such as the one with Novell, as a way to encourage interoperability. But along with those pacts came Microsoft's threat of legal action against companies that don't have a deal in place. In 2007, Microsoft said that Linux infringes on 235 of its patents.

Open-source products are subject to patent litigation if they infringe on Microsoft patents, just as proprietary products face legal action for infringement, said Gutierrez. "There's no reason why the same laws of nature shouldn't apply to them as they apply to any other proprietary vendor," he said.

Microsoft is in the same boat as the open-source vendors, he said. Microsoft is hit with patent-infringement suits "on a weekly basis," he said. Also, Microsoft itself has paid $1.5 billion in the past couple of years to other companies for IP rights, he said. "It's our job as a vendor to do that so you as a user don't have to worry about it," he said.

Curiously, Microsoft declines to specify which of its patents are relevant to Linux. "We do discuss the details of our technologies and patents with companies that are engaged in good-faith licensing dialog," said Gutierrez. "That's the proper context in which to have it, that's the way it's handled in the industry."

But others think there's probably another reason that Microsoft won't specify which of its patents are relevant. "As soon as you declare patents you believe are infringed, they become the subject of re-examination," Rosoff noted.

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