Thursday, April 5, 2018

Microsoft's Shared Innovation Initiative and its evolving approach to intellectual property rights

Microsoft has announced a "new IP strategy for a new era of shared innovation," giving customers ownership of new patents and design rights resulting from their collaboration with Microsoft, with Microsoft merely getting a license to use those technologies for the improvements of certain "platform technologies" such as Azure, Office, and Windows. Microsoft is even willing to support contributions to open source projects at a customer's request.

I haven't done any consulting for Microsoft in more than four years, and even while I was doing some work for them (such as on standard-essential patents), I never received any confidential information about their strategies or the terms of their license agreements. Whatever I know, I know from publicly-accessible court filings, one of which indicated that Samsung at some point paid north of $1 billion in Android patent royalties to Microsoft during a 12-month period.

As an anti-software-patent campaigner (2004/2005), I was profoundly worried about Microsoft using its patents against Linux and other free and open source (FOSS) software. A few years later, I realized three things:

  1. In certain contexts (such as the i4i case), Microsoft actually took pro-defendant positions.

  2. While I understand that many people disliked the idea of Microsoft charging patent license fees to Android device makers, there was no exclusionary use of patents. To the extent Microsoft sought injunctive relief, it merely wanted to bring Android OEMs to the negotiating table in order to reach a license agreement. Depending on the specific terms, licensing can also be anticompetitive, but by now we all know that none of this prevented Android from succeeding, and dozens of companies (many of which would have the resources and sophistication to defend themselves in court) chose licensing over litigation.

  3. I considered many free and open source software activists hypocritical because they criticized Microsoft over almost anything it did in connection with open source while giving the rest of the industry a free pass and intentionally turning a blind eye to some other players' clearly abusive conduct. Just like other companies orchestrated antitrust complaints against Microsoft, Microsoft was in some cases proven and in other cases merely suspected to be behind initiatives targeting other large players. But if there were things that deserved to be criticized, who cares? In the information and communications technology sector, lobbying entities and NGOs that raise issues serve an important hygienic function, provided there really is fire and not just smoke.

During the "Smartphone Patent Wars" it happened for the first time that Microsoft faced the threat of injunctive relief as a result of litigation brought by another large corporation: Motorola Mobility. That kind of adversary, which at some point belonged to Google, wasn't just the kind of troll that you can pay to go away (and that usually won't satisfy the eBay standard for patent injunctions). "Googlorola" wanted to gain so much leverage over Microsoft that it would have been forced to cease and desist from all litigation against Android device makers. Even during the early stages of its dispute with Motorola, Microsoft still made an often-cited filing with the Federal Trade Commission in which it advocated, or at an absolute minimum appeared to advocate, injunctions over standard-essential patents (SEPs). But that changed not much later, and by now most major players, except for mostly failed businesses that increasingly rely on patent monetization, agree that SEP injunctions shouldn't be granted. Two years ago, Google joined the Fair Standards Alliance, which promotes SEP licensing on FRAND terms.

I had already done some work for Microsoft when I first took a clear "no SEP injunctions" position on this blog. I knew that Microsoft's standards group wasn't taking the same position at the time, but no one even tried to discourage me from voicing my position on this.

In recent years, Microsoft's IP-related positions and priorities have apparently evolved further.

The emphasis in announcements of patent license agreements between Microsoft and Android device makers appeared to shift to bundling deals: Microsoft was apparently very interested in getting companies to preinstall certain Microsoft Android apps, such as Skype. The derogatory term for this is "bloatware," and no one knows by how much Microsoft lowered those license fees, but analysts speculated that Android device makers saved a ton of money by bundling Microsoft's apps.

Meanwhile, Windows Phone has been discontinued, so Microsoft has surrendered to Apple and Google with respect to mobile operating systems. It still has the Windows desktop and server business, but its growth strategy is centered around apps and services. So far, Wall Street loves that new focus, but it remains to be seen over the years whether Microsoft can fend off competition in markets in which it won't have the benefit of making the underlying operating system. I don't mean to be negative, but the jury is still out on this.

The most surprising and--to me--most disappointing indication of Microsoft now being more interested in apps and services than in its own operating system platforms was when it filed an amicus curiae brief last year with Red Hat and HP, supporting Google against Oracle with respect to "fair use." Parasitic Red Hat and Oracle-obsessed HP had previously sided with Google on copyrightability; Microsoft hadn't. But with respect to "fair use" (which Android's use ofthe Java APIs isn't according to the United States Court of Appeals for the Federal Circuit), Microsoft actually sided with the weak-IP camp.

I don't understand why. Maybe Microsoft would like some more freedom with respect to its own use of the Java APIs (in some enterprise applications and on the Azure cloud); maybe Microsoft is more interested in a constructive relationship with Google (unlike Oracle, Microsoft stopped funding various industry groups accusing Google of abusing its search engine monopoly); maybe Microsoft wanted to curry favor with the open source community this way; or maybe Microsoft is interested in "balance of power" (the historic British take on continental European politics) and is afraid of Apple being or becoming too powerful, so it may not want Android's success to be compromised by the Java copyright situation.

Whatever the reason or combination of reasons may have been, I'd never have expected Microsoft to support Google against Oracle on "fair use." By way of contrast, the Federal Circuit concluded: "There is nothing fair about taking a copyrighted work verbatim and using it for the same purpose and function as the original in a competing platform." The "old" Microsoft--the Windows-centric one--would have been interested in reasonably strong protection of its intellectual property in APIs. The new Microsoft is apparently more interested in access to other companies' APIs.

I interpret yesterday's announcement of the Shared Innovation Innovative as an indication of Microsoft continuing to modify its approach to intellectual property. It's still far from advocating the abolition of software patents, but it appears to be trying hard to be part of the sharing economy in some other ways.

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