| Microsoft bolsters Windows Embedded, Mobile IP protection |
Feb. 09, 2006
[Updated Feb. 10] -- Microsoft announced on Thursday that it will increase IP protection for the more than 4,000 original equipment manufacturers (OEMs) and distributors of its Windows Embedded and Windows Mobile software. These customers will now receive IP protection comparable to that already offered for other Microsoft flagship products.
The additional IP protection comprises the following, according to Microsoft:- The defense of OEMs and distributors against IP claims in every country in which Microsoft distributes or markets its Windows Mobile and Windows Embedded products; previously, this protection was for U.S. and selected countries only
- Protection of all patent, copyright, trademark and trade secret claims based on Windows Mobile and Windows Embedded software; previously, not all trade secret claims were covered
- Removal of the monetary cap related to litigatory defense costs
"This new protection pretty much covers everything Microsoft and its partners want covered when it comes to IP protection," Windows Embedded marketing manager Jason Stolarzcyk told WindowsForDevices.com. "This is like a jump on a trampoline -- we're reaching another level of service for our partners and distributors."
Microsoft's Windows Embedded and Windows Mobile software is typically used to build devices such as smartphones, portable media centers, automated teller machines, retail point-of-sale systems, GPS devices, industrial robots, and thin clients. Windows Embedded comprises Windows XP Embedded, the componentized version of Windows XP Pro, and Windows CE, a small-footprint OS developed expressly for handheld devices and embedded applications. Windows Mobile, in turn encompasses a half dozen gadget-oriented software stacks derived from Windows CE, targeting consumer devices like smartphones, PDAs, and audio/video player/recorders (called "portable media centers" by Microsoft).
The need for IP protection
  "By extending IP protection to the embedded and mobile device manufacturing space, Microsoft is helping ensure the integrity of our offerings and is allowing us to focus on the next wave of innovations," Boris Melitsky, senior vice president of product strategy and development at Symbol Technologies said in a statement. Symbol uses Windows CE and Windows Mobile in many of its handheld computers, including the Enterprise Digital Assistant rugged PDA family (left) and a number of data collection handhelds such as the MC3000 series (right).
Several high-profile IP disputes have raised the importance embedded device-makers and distributors attach to careful IP risk management. Consequently, an OS vendor's IP indemnification policy is becoming increasingly important to OEMs during the embedded OS selection process.
For example, Research In Motion, maker of the popular BlackBerry email device, has been involved in a long-running patent dispute with NTP, which owns a key patent to its push email software. The two companies are currently under pressure to negotiate a deal before a Feb. 24 court hearing. If the two companies do not reach an agreement by that date, a judge will make a binding decision that could affect the future of millions of BlackBerry users.
Standardizing indemnification
David Kaefer, director of Microsoft's Intellectual Property Licensing Group, told eWEEK's Peter Galli in an interview that this latest move was part of Microsoft's long-term plan to standardize its indemnification for channel partners and end customers.
"The process has been under way since 2003, when Microsoft removed monetary caps for its volume licensees and customers, after hearing that this was the top customer satisfaction issue for them," Kaefer said.
"Then, in November 2004, we offered all customers the level of indemnification we were offering our volume licensees," Kaefer said. "We then switched gears into the partner community and realized that we had all these varying levels of indemnification depending on whether you were an OEM or a system builder or an ISV partner, and by last summer we had brought just about everyone up to one common bar, but we had difficulty slipstreaming in a lot of the folks in the embedded world," he said.
The biggest challenge for Microsoft with regard to the embedded market was that it needs great flexibility in the type of software it puts on devices and often needs to modify that software, in large part because many of the devices had small footprints and the software has to be fitted onto that.
"This speaks to why indemnification is so important for this channel: It is one where we allow changes to our software and this makes offering indemnification more challenging," Kaefer added.
Indemnification status by customer/application category
| | Patent
Claims | Copyright
Claims | Trade Secret
Claims | Trademark
Claims | Legal Defense Fees | Damages and Settlement Fees | | OEM | Covered | Covered | Covered | Covered | No Cap | Cap | | OEM Distributor | Covered | Covered | Covered | Covered | No Cap | Cap | | System Builder | Covered | Covered | Covered | Covered | No Cap | Cap | | ISV Royalty Partner | Covered | Covered | Covered | Covered | No Cap | Cap | | Reseller/Classic Distributor | Covered | Covered | Covered | Covered | Cap | Cap | | Mobility and Embedded OEM / Embedded Distributor | Covered | Covered | Covered | Covered | No Cap | Cap | | Retail | Covered | Covered | Not
Covered | Covered | Cap | Cap |
(Source: Microsoft)
Analyst reactions mixed
Analysts contacted by WindowsForDevices.com had mixed reactions to the Microsoft announcement.
"This announcement signals an extension of Microsoft's indemnification program and further mitigates the risk to OEMs of Microsoft introducing patented technology into its Windows Embedded Platforms," Venture Development Corp. (VDC) Embedded Software Group Director Chris Lanfear told WindowsForDevices.com in an email. "The lawsuit filed by Visto in December 2005 against Microsoft shows that disputes over patented technology can come from a number of directions in the mobile and embedded software market.
"Although Visto is not currently going after Microsoft OEM licensees, the fear is that at some point it might -- much like what SCO [Group] is threatening for users of Linux."
Lanfear said the real danger here, in his opinion, is an injunction or other ruling preventing an OEM from deploying that software on its devices or creating uncertainty among its customers about future availability.
"NPT's lawsuit against RIM has resulted in a number of industry watchers counseling about the risks of deploying RIM [Research In Motion] devices," Lanfear said. "Microsoft has addressed the injunction issue in its indemnification package; however, its remedies will take time to engineer or negotiate. Of course, with shrinking product cycles being the norm in the embedded systems industry, time is the real enemy."
"This announcement seeks to shift the balance in software platform selection in Microsoft's favor by planting small seeds of doubt in the minds of developers and risk evaluators at OEMs. It is just one more way in which Microsoft has differentiated itself vs. open source/Linux," Lanfear continued.
"Is this a huge announcement? No. But it should be seen within the context of Microsoft's other strategic efforts to set itself apart from the open source model. Clearly, Microsoft continues to see open source -- and in particular Linux -- as its most important embedded competitor. And it should," he added.
For further analysis by Lanfear regarding this move by Microsoft, visit his blog, On Target: Embedded Systems.
Rob Enderle, principal analyst for the Enderle Group and a longtime Microsoft watcher, said that "indemnification against [IP] litigation not only has become a requirement for any technology purchase, it strongly pushes companies toward the buy side of the build-versus-buy decision."
But isn't Microsoft a bit late in offering this protection for the embedded vertical market? Other embedded OS vendors, such as Wind River and MontaVista, and others, have been offering IP indemnification protection for years, with products they've sold to Lockheed-Martin, Boeing, NASA, and other demanding clients.
"True, but this is backed by Microsoft's impressive legal resources," Enderle told WindowsForDevices.com in an email. "Microsoft is more in line with IBM in terms of a full-on IP defense. I'm not convinced Wind River or MontaVista would scare many people; taking Microsoft on is far from a low-budget, low-risk effort. Microsoft is trying to overtly step in front of the bullet, and their retaliatory capability is second to few companies (IBM, Intel, and Oracle being potentially even more scary in this role)."
Lawrence Rosen, an IP attorney affiliated with Stanford Law School, told WindowsForDevices.com that this move by Microsoft is particularly significant with respect to patent concerns.
"This is an important step in the game to neutralize software patents. (The copyright, trademark, and trade secret claims are small potatoes next to patents.) I try not to criticize folks for being late to the table at Thanksgiving," he wrote in an email.
Is it possible that one company, even one with the resources Microsoft owns, can protect all its customers in all countries against all claims against all its software, Rosen and Enderle were asked.
"Of course not," Rosen said. "That's why I call it merely a 'step.' We and Microsoft may encounter valid patents that even Microsoft can't infringe. But Microsoft has the financial and technical capacity to help protect its customers from third-party infringement lawsuits, with no cap on defense costs, so I am pleased they are promising to do so."
"Sure, but it has to be a large global company," Enderle said. "There aren't many with that level of resource. Realize it isn't just money; you actually have to have resources in a broad cross section of the world so the threat is credible. This is done as a deterrent. If the deterrent doesn't work, this would quickly become excessively expensive for company even of Microsoft's scale.
Even though indemnifying so many companies sounds like a big order to fill, Enderle was bullish about Microsoft's ability to deliver, "[as long as] Microsoft's image as a nasty company to take to court holds," Enderle added. "But if they look vulnerable, it could become problematic. In the end they have to protect their IP regardless, so this is simply taking a vastly more aggressive, and probably now required, stance."
Intellectual property attorney Dan Ravicher, legal director of the Software Freedom Law Center in New York City, told WindowsForDevices.com that he, for one, was wary about the Microsoft announcement.
In an email, he wrote: "Today's announcement shouldn't been seen as groundbreaking. Indemnification isn't protection, per se, it's more of a, 'we'll stand between you and the problem.' And, it's really not as though Microsoft is doing something good for these people for free; the licensees are surely paying a pretty penny for such 'protection' as a baked-in cost of their proprietary license fee.
"Plus, I'd be curious to see the exact legal language being used to grant these 'protections.' as I wouldn't be surprised if it contained significant exceptions or exclusions. A lot of New Orleans home owners thought their insurance protected them from storms, but they are now finding out that loopholes in 'coverage' are not only commonplace, but frequently substantial."
Exceptions might, for example, include the case when a device developer modifies Windows CE using available "shared source," and in doing so creates a derivative work that violates a third party's IP. Microsoft could hardly be expected to indemnify that developer's added or modified code against claims by the third party.
Further information
Further details on the new Windows Embedded and Windows Mobile indemnification policies are available here.
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