Microsoft, Lexmark in cross-licensing deal [International]

Microsoft Corp. and Lexmark International Inc., which makes printers and imagining equipment, have struck a cross-licensing deal, the companies said on March 17 [2009]. The agreement covers a range of Lexmark printers and Microsoft software, but the companies did not disclose specific products or financial details.

"Because both Microsoft and Lexmark have access to an extensive range of technologies, this agreement will allow each company to shorten its development cycle and increase its focus on customer-related innovation," said David Kaefer, Microsoft's general manager of intellectual property licensing, in a statement.

Microsoft shares rose 45 cents, or 3 percent, to $16.73 in afternoon trading, while Lexmark, based in Lexington, Ky., saw its stock jump 55 cents, or 3.4 percent, to $16.90.

Intellectual Ventures: On the Prowl?

It might be the single company with the most patents that you’ve never heard of: Intellectual Ventures.

The six-year-old enterprise — the subject of a lengthy profile by Intellectual Property Law & Business — is the brainchild of Nathan Myhrvold, the former chief technologist at Microsoft. And its goal is singular: to amass dozens upon dozens of patents that it can license. (Intellectual Ventures claims to have no desire to manufacture or commercialize any products.) In March 2006, Myhrvold penned an opinion piece in the WSJ, “Inventors Have Rights Too.”

How does the company get its patents? Well, it buys a lot of them, with a $400 million war chest provided by a who’s who of tech companies: Nokia, Intel, Apple, Sony, and Microsoft. And according to the story, the secretive venture dreams them up, hiring fleets of consultants to brainstorming sessions on ideas in a variety of industries. Some in the IP asset management field estimate that Intellectual Ventures has amassed 3,000-5,000 patents.

But not everyone’s supportive of the company:
As the patent stockpile grows, so does the speculation–and the fear. IP lawyers and tech executives worry that Intellectual Ventures is less interested in changing the world with big ideas, and more focused on becoming an uber-troll, wreaking litigation havoc across industries with its patents.

The privately held company won’t discuss its finances. But if it doesn’t work out, Myhrvold probably won’t have trouble finding work. According to the story, the 47-year-old gajillionaire holds advanced degrees in theoretical and mathematical physics, mathematical economics, geophysics, and space physics. He studied quantum physics at Cambridge with Stephen Hawking, is a published nature photographer and “has had his state-of-the-art kitchen–and his recipes–featured in New York Times magazine.”

Microsoft liable for income tax in India, finally? [India]

If a survey is conducted in India with the sole objective of finding a non-user of Microsoft software, the exercise may not yield tangible results at all. In other words, no computer literate can even feign ignorance about his familiarity with Microsoft products. So pervasive and entrenched are the Microsoft brand name and products in any computer-literate society.
Microsoft pays income tax on income generated from its software licensing in all other countries in the world. But not many know that the Microsoft Corporation does not contribute even a single penny to the Indian exchequer in terms of income tax!

The CIT(A) -- Commissioner of Income Tax (Appeals) -- handling international taxation cases in Delhi has recently held that the Gracemac Corporation, a 100% subsidiary of Microsoft which had in 1999 granted proprietary and ownership right in license and in intellectual property (IPR) of Microsoft software and hardware products, is liable to pay income tax on its gross royalty income earned out of licensing of software to Indian customers.

The total gross royalty income for the six assessment years -- from 1999 to 2005 -- is computed to be about Rs 2,240 crore (Rs 22.40 billion). Going by 15% tax on royalty u/s 9(1)(vi) of the Income Tax Act read with Article 12 of the DTAA (Double Taxation Avoidance Treaty) with the United States, the total tax liability on the Microsoft subsidiary which has been named after Bill Gates' wife -- Melinda -- is calculated to be about Rs 350 crore (Rs 3.50 billion). Given that interest has also been confirmed, the total liability is likely to exceed Rs 700 crore (Rs 7 million).
No doubt, this case has all the makings of a big revenue newsmaker which would travel up to the Apex Court in due course of time, but a studious perusal of the facts, the legal positions -- both domestic as well as international -- and the lucidity with which every point of the counsels of the assessee has been torn apart, reveals that the Revenue department has indeed made a solid case which would serve as a model decision for others in the department and also a quality training material for the young revenue officers who are keen to dabble into the complex architecture of international finances and their tax liabilities.

AOL pays $850m for Bebo in cash deal [International]

AOL has bought social networking site Bebo for $850 million in cash. The Time Warner-owned web services company said that the Bebo network would be a valuable place for it to sell advertising.

AOL began in the internet access business, but has expanded to offer instant messaging software AIM and ICQ. Social networking sites have been a phenomenon, with tens of millions of internet users keeping in touch and posting information about their lives on sites such as Bebo, Facebook and MySpace. Traditional business has been keen to buy into the phenomenon and instead of launching their own platforms, business giants have tended to buy into existing sites.

Bebo rival Facebook received $240 million in funding from Microsoft last October in a deal that valued the company at $15 billion. MySpace was bought by Rupert Murdoch's News Coproration in 2005 for $580 million.

A new ‘adda’ [hangout] for lawyers networking in India [India]

The Indian legal community has a new player in the online field: a portal called www.legaladda.com, which seems to have gotten the nod from Microsoft. Surprising, given the rather casual and colloquial use of the word ‘adda’ as part of the brand. Not the kind of company that Microsoft would like to keep. ‘Adda’, a colloquial word is Hindi slang for hangout. Is this a serious site? We will have to wait and see…

Law Wire™ had a look at the portal itself. It has this to say on the home page by way of introduction:
LegalAdda seeks to build a vibrant community of legal professionals in India.
The site aims to facilitate collaboration amongst the legal ecosystem and network with each other. We invite students, practicing lawyers, law firms, colleges & universities to actively participate at the site.
At LegalAdda, you can participate in discussions at the forums. Your white papers on legal topics are invited at the "Contributions" section. Events of interest to the legal community can be shared at the Events section. The "Jobs and Internships" tab provides opportunity for prospective employers to post their open positions. Candidates looking for internships & jobs can benefit from this section.

It is an interesting concept, and slightly different from the existing legal portals on the market, which serve as agglomerations [euphemism for ‘databases’ of laws and rules] and occasionally offer legal advice in violation of the Bar Council of India Rules. The USP of the website appears to be that it is essentially a social networking site and a space for people in the legal world to meet and connect with each other. One is curious to see if this will catch on.

Microsoft launches legal online community portal on IPR - Legaladda.com

Microsoft India has launched a legal online community portal, Legaladda.com, which will offer an online community for interaction between legal professionals and update people on topics like intellectual property rights. The company also announced the awardees of the ‘Microsoft Intellectual Property Scholar Programme’.

Neelam Dhawan, Managing Director, Microsoft India, said, “Enforcing IPR laws has been a challenge and the industry, as per studies, has been losing nearly 72 per cent of its revenue due to circulation of pirated software – a menace which hasn’t been checked due to poor awareness among law-enforcing agencies here.”

She further said, “If India has to achieve the status of a truly knowledge-based economy, fostering innovation and creating a strong IPR environment is critical. The Microsoft Intellectual Property Scholar Programme is an attempt to create a sustainable IPR ecosystem, whereby we promote, recognise and reward the best of breed budding IPR practitioners in the country today. It is an investment in India’s future.”

“We are lacking in respect for intellectual property rights. Nearly 95 per cent of the software gets pirated across pharmaceutical, music and IT industry. We should ensure that the laws are in force. Microsoft is offering scholarships to law students to encourage them to specialise in the IT and Intellectual Property field,” Dhawan added.

The scholarship was initiated in 2006 with scholarships for students of Nalsar. The programme has now been extended to other law colleges and universities across the country. The scholarship amount is Rs 80,000 per student and is awarded on the basis of the evaluation of the student’s research papers on pre-approved topics related to IPR by experts from the law firm Amarchand and Mangaldas as well as the legal and corporate affairs team at Microsoft India.

Microsoft: King of The Patent Hill

Similar to a stash of weapons a player might rack up during an online adventure game, high technology companies for more than two decades have racked up as many patents as possible.

Patents can come in handy, for instance, as a defense – or an offense—when one company sues another for patent infringement.

On the other hand, cross-licensing patents between two or more companies can cement business collaborations.

For years, IBM has been one of the most prolific tech companies in terms of piling up patents.

Now, it's Microsoft's turn.

The Institute of Electrical and Electronic Engineers' (IEEE) IEEE Spectrum magazine listed Microsoft as the leader in new patents awarded in 2006 in its November 2007 issue. In addition, intellectual property consultancy the Patent Board this week ranked Microsoft first on its Patent Scorecard of top IT patent holders.

The software titan has racked up a total of around 8,500 U.S. patents granted, the company said this week.

Microsoft also has more than 15,000 additional patents pending, and is applying for about 3,000 per year, according to a company statement. That's partly due to the company's aggressive R&D budget—a war chest of $7.1 billion in 2007 alone. While most of that money goes to creating products, it also yields a bounty of intellectual property.

"We pursue patents on only those inventions that are in line with our business objectives and have strategic value to the company," Bart Eppenauer, Microsoft's chief patent counsel and associate general counsel, said in a statement. "Close alignment with our business strategies, goals and priorities has enabled Microsoft to become the new standard bearer for patent quality in the technology industry."

Like virtually anything having to do with Microsoft these days, defending and protecting patents and other forms of intellectual property is highly controversial. Patents can, after all, be used as weapons and also as a means of intimidation.

Last year, CEO Steve Ballmer and other executives asserted that Linux vendors, especially Red Hat, are in violation of as many as 235 of Microsoft's patents – although the company would not disclose which specific patents it believes are being infringed upon.

However, that sword can cut both ways. Last year, Microsoft settled out of court with tiny Eolas Technologies, which holds a patent that lower courts found Microsoft had infringed upon with its Internet Explorer browser.

In November 2006, in one of its most controversial patent deals to date, Microsoft signed an IP cross-licensing and collaboration deal with Linux vendor Novell. The deal was roundly criticized by other members of the open source community who claim Novell sold out by joining forces with Microsoft.

Meanwhile, in September, the European Union's Court of First Instance upheld a European Commission (EC) order that Microsoft license IP, including patents, required for interoperability with its products to competitors.

Microsoft settles IE patent dispute with Eolas [International]

The long-running legal battle over web-browser technology is over, but neither side is talking about the details

Microsoft has settled a long-running and expensive lawsuit with Eolas Technologies, a start-up backed by the University of California, that alleged Internet Explorer infringed a patent.

"We're pleased to be able to reach an amicable resolution in this long-running dispute with Eolas and the University of California," the company said in a statement on Thursday, though it declined to share further details. Eolas couldn't immediately be reached for comment.

The suit concerned technology that lets web browsers call up separate applications or plug-ins, such as Flash or Java, within a web page. While at the University of California at San Francisco, Eolas chief executive Michael Doyle led a team that worked on the technology in the patent, and he spun off Eolas to help commercialise it, according to Eolas.

Microsoft revamped Internet Explorer to work around the patent in 2005.

Eolas prevailed earlier in the case, with a court awarding damages of $521m (£258m) in 2003US Patent and Trademark Office upholding the validity of the Eolas patent in 2005. However, a US Supreme Court decision this year weakened Eolas' case, and Microsoft said it expected the damages in the case to be revisited. and the

The Seattle Post-Intelligencer reported the settlement on Thursday and published on Monday a letter from Eolas chief operating officer Mark Swords to shareholders that said: "We are very pleased that we can now focus our resources on commercialising our existing intellectual property portfolio and developing new technologies." It didn't offer details of the settlement, but said Eolas anticipates paying shareholders a dividend by the end of 2007.

Although Microsoft has been a target in several intellectual property cases, the company affirmed its support for intellectual property in the computing industry.

"Microsoft values intellectual property and believes that the proper protection and licensing of IP enables companies and individuals to obtain a return on investment, sustain business and encourages future innovations and investment in the IT industry," the company said.

Source: ZD Net [United Kingdom]

Patent Infringement Claims Suggest Microsoft Heading for Open Source Litigation

With Microsoft claiming that Linux and other open source software violates 235 of its patents, at the same time the company is cross-licensing patents it says Linux has violated, analyst Rob Enderle sees the Redmond software giant positioning itself for litigation. The big question, says Enderle in his blog on the IT Business Edge Web site, is who will be the initial target of any legal action by Microsoft.

"My take is Microsoft will put litigation off as long as it can," Enderle says, "but is on a path where I don't think it can avoid litigation forever if it wants to actually protect its patents."

Listing the likely first targets for such litigation, Enderle includes IBM as the largest un-licensed supplier of Linux, the Linux Foundation as a proxy for Linux itself, and Red Hat as the most powerful Linux distribution brand. However, Enderle thinks IBM has too much legal firepower and cross-licensing ammo to provide the overwhelming victory Microsoft would seek in its first legal assault on open source. On the other hand, the relatively meager resources the Linux Foundation is likely to bring to court would leave Microsoft looking like a bully and provide a rallying point for its foes. That leaves Red Hat with a bull's-eye on its back, being neither a legal pushover nor an opponent with resources nearly equal to those of Microsoft.

Enderle's full analysis of Microsoft's recent actions, as well as his advice to Linux-using enterprises who want to avoid getting caught in the crossfire, can be found at his blog:

http://www.itbusinessedge.com/blogs/rob/

Linus Torvalds On Microsoft"s Patent Infringement Allegations: "They Are Bluffing!"

“Linux kernel violates 42 of our patents and we'll eventually sue!” threatened Microsoft on Monday. Unfortunately for the Redmond company, not everyone shivered with fear. Linus Torvalds, lead developer of the Linux kernel, gave Microsoft an answer and it was definitely not the thing the software giant wished to hear.

According to Torvalds' mail to InformationWeek, Microsoft is unlikely to hold too many winning card, because:

"Basic operating system theory was pretty much done by the end of the 1960s. IBM probably owned thousands of really 'fundamental' patents. The fundamental stuff was done about half a century ago and has long, long since lost any patent protection."

Furthermore, Torvalds doubts that Microsoft is really certain of a victory in court. Instead, he believes that the Redmond company is just bluffing in hope that it would reach quick financial settlements with other parties rather than going to court:

"They'd have to name the patents then, and they're probably happier with the FUD [fear, uncertainty, doubt] than with any lawsuit. [...]So the whole, 'We have a list and we're not telling you,' itself should tell you something. Don't you think that if Microsoft actually had some really foolproof patent, they'd just tell us and go, 'nyaah, nyaah, nyaah!'"

Last but not least, Torvalds wonders if Microsoft isn't the one violating more patents and hints that a thorough review of the source code for Windows might reveal that the software giant is the one that has to pay up to other patent holders.

Microsoft on Google's 'copyright violation' [International]

Copyright experts scoffed Tuesday at attempts by a top Microsoft lawyer to discredit Google's approach to copyrighted material.
Most believed Associate General Counsel Thomas Rubin's speech before a book conference -- as well as his opinion piece in the Financial Times -- had a lot more to do with Microsoft's vicious competition with Google than about solid legal arguments.
"Clearly they're in a pitched battle," said Mark Flagel, a partner with Latham & Watkins in Los Angeles. "Microsoft is doing everything it can to pick its fights. This is a popular one."
In a speech before the Association of American Publishers, Rubin accused Google of systematically violating copyright law. Google's Book Search and YouTube video sites are the perpetrators of these injustices, according to Rubin.
"Concocting a novel 'fair use' theory, Google bestowed upon itself the unilateral right to make entire copies of copyrighted books not covered by these publisher agreements without first obtaining the copyright holder's permission," Rubin's speech read. "Anyone who visits YouTube ... will immediately recognize that it follows a similar cavalier approach to copyright."
Google disputes that it violates any copyright laws. Its book search site allows people to search texts of many copyrighted books, the company maintains, but if a copyright owner has not consented, the searcher will only see a snippet of the copyrighted book.
That's a critical distinction for legal analysts. It's one thing, they say, to offer a search of a book's text and quite another to make an entire copyrighted book available, without permission, for copying -- which Google maintains it does not do. Google also claims it removes copyrighted songs and video from YouTube any time it is notified of infringement.
"The goal of search engines, and of products like Google Book Search and YouTube, is to help users find information from content producers of every size," David Drummond, Google's chief legal officer, said in a statement in response to Rubin's speech. "We do this by complying with international copyright laws, and the result has been more exposure and in many cases more revenue for authors, publishers and producers of content."
Rubin cast Microsoft's own book search as superior on copyright treatment. Experts didn't find this a surprising move given that Google, with its recent online word processing and spreadsheet offerings, has begun to encroach on Microsoft's core software businesses.
Microsoft has reacted to Google's success in recent years by beefing up its search capabilities, but may wind up harming itself with Rubin's arguments. After all, a lot of the law is unsettled when it comes to copyright protection in the digital age, said Eric Goldman, director of Santa Clara University School of Law's High Tech Law Institute.
"It's a very dangerous game for Microsoft to go out and push a major player in this space on copyright issues," Goldman said. "It's entirely possible that if they succeed in painting Google into a box, they may have inflicted a wound on themselves."
Courts are still grappling with whether Google's approach to books constitutes "fair use" under copyright law, Flagel said. Judges are also weighing whether Google should be held responsible for providing information, in search results for instance, about businesses that infringe on other people's copyrights.
The 9th Circuit U.S. Court of Appeals is expected to rule on three related cases on that subject by the end of the summer, said Fred Von Lohmann, a staff attorney for the Electronic Frontier Foundation in San Francisco.
Von Lohmann said Rubin's speech, which played up the fact that Microsoft asks copyright holders' permission before using their works, highlighted a way of thinking that he finds highly disturbing. Seeking permission from movie studios and publishing houses before using their material for a new innovation might be something Microsoft -- with its resources -- can do easily, but small-time innovators can't, Von Lohmann said.
"If you're a startup in a garage, is Hollywood going to return your calls if you're trying to develop something like YouTube?" he said. "Do you think they would have been able to launch a company if they had to negotiate permission?"
He continued: "The question here is not about do you like Google better or Microsoft. The question is, do you want a world where you can innovate first, or you have to hire lawyers and ask Hollywood's permission."