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Microsoft patent claims hint at internal issues

Many also argue that Microsoft is at a turning point as it tries to build a successful business around online services and advertising after it waited too long to adopt the new business model that rocketed Google Inc. to its current success. While Microsoft launched products such as the Xbox 360 game console and Zune digital media player in an area it said will be key going forward -- entertainment and devices -- neither device has proved successful. The former product, while popular, has so far made no money for the company, and the latter is flailing against its exceedingly popular and incumbent competitor, Apple's iPod.

It remains to be seen whether Microsoft will be able to collect on its claims or if the open-source community will use them to strive for patent reform, currently a popular issue before the U.S. Congress. However, the claims certainly will raise important issues around how patent-infringement cases will be litigated in the future, said Paul Lesko, head of the IP litigation group at SimmonsCooper LLC in St. Louis.

"If there's going to be a skirmish in the future, they helped draw the lines," he said. "It applies certain pressure [to open-source companies] ... to find out how many of those patents are worth the paper they are printed on and how many are not."

Linux evangelist Eric Raymond seems to think the patents at issue fall under the latter category. "It is nearly as certain that those patents are all junk," he said in an e-mail interview. "If Microsoft had sound and critically relevant patents to assert, they wouldn't need to screw around with vague threats. They'd simply publish the patent numbers and it would be game over for Linux."

Horacio Gutierrez, Microsoft vice president of intellectual property and licensing, said that while Microsoft won't discuss specific patents publicly, it has discussed them in private with companies such as Novell Inc. that struck deals with the company to exchange patent royalties for indemnification against litigation. Microsoft's recent claims are an attempt to avoid going to court rather than to pick a legal battle with open-source companies, he said.

"What we've done is we've come up first with a licensing mechanism that is a reasonable [way] for companies in the business of distributing open-source software to reach an understanding [with us]," he said.

However, Gutierrez also acknowledged that Microsoft's decision to seek royalties for patents is a business one. "Microsoft invests over 6 billion in research and development a year, and that's an investment that results in innovation," he said. "Our shareholders have a right to expect that we are going to protect that innovation."

(Grant Gross in Washington, D.C., contributed to this report.)

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