Microsoft has a new indemnification program. Yawn.
Tuesday, February 1st, 2005
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Last November, Microsoft updated its intellectual property (IP) indemnification program to include virtually all standard Microsoft products, for all users. Under the Microsoft program, if you purchase a copy of Microsoft Office and someone sues you, claiming that Office infringes their patent, Microsoft will defend you in court and will either obtain a license from the owner so you can continue to use Office or will replace the infringing component with something functionally equivalent. Previously, only Microsoft’s “volume customers” were provided with this legal protection. Now Microsoft protects virtually all users (see below for the exception), with no dollar limit on what Microsoft will spend to defend you. (See http://www.microsoft.com/indemnification for details.)
Without wanting to sound cynical, I would suggest that this change in Microsoft’s intellectual property indemnification program is essentially meaningless — except for its marketing value.
Suppose that John’s Flower Shop purchases Office, which is then found to infringe a patent held by someone like Sony. John’s is liable for damages under United States patent law. But the odds that Sony will sue John’s for patent infringement are extremely small. Rather, Sony will sue Microsoft, the party that has money to pay a substantial damage award and the party that’s in a position to license Sony’s patent, generating a revenue stream for Sony. Unlike John’s, large companies like General Electric might be a target, since they likely have thousands of copies of Office and have the money to pay damages.
But wait. Volume customers were already indemnified prior…
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