The iron fist in the patent leather glove

Microsoft's patent strategy is thrown into sharp relief by HP's leaked memo, and the evidence for war is mounting

It can take a long time to realise that war is in the air. Is that a sword being unsheathed or merely a sabre being rattled? A field exercise or the first stage of mobilisation? Are those defensive forces digging in at the border, or shock troops readying a surprise onslaught?

These issues consumed military planners during the Cold War, but they all boil down to one simple question: what is in the mind of the opposition? Until the first shot is fired, there is always an element of ambiguity in even the most offensive posturing -- and you can be sure that an aggressive foe will use that ambiguity to the full.

Which is why field marshals and CEOs alike rely so heavily on intelligence. It was information from the field that kept us from nuclear annihilation; we know to our cost how bad or no intelligence can lead even the most sophisticated governments astray.

On the other hand, one piece of critical information can crystallise an entire sea of murk. Like a flare soaring above a night-time battlefield, HP's leaked memo from June 2002 is just such a defining item.

Short, sharp and clear, it outlines HP's fears that Microsoft is going to war on open source through patents. HP knows Microsoft: it has enjoyed a close relationship with the company for decades and has struck many deals. When HP recognises that MS has decided on a plan, you can be sure of that perception. The details in the memo -- the open source products up first for attack, the thrust of the campaign to come and the implications for HP -- will not have come from HP's imagination. Words will have been had.

But this was two years ago, and the promised onslaught has yet to happen. Could this be just another bit of MS partner management, a bit of internal FUD designed to keep HP on the straight and narrow without the risks of having to actually do anything? Is Microsoft's patent arsenal there, as the company has said, purely for defensive purposes?

Let's look at what Microsoft has been doing in the intellectual property arena over the past couple of years. It has embarked on a record number of cross-licensing deals, including some with long-term combatants such as Sun, and started to open up its intellectual property portfolio to anyone who wants to sign up. It has registered, bought or prepared thousands of patents. It has settled many long-running IP cases out of court, never to its advantage. It's said that academics can use its IP for free.

Are these the signs of a company settling down to being a good corporate citizen and preparing to play by the rules, or a company preparing to use the court and patent system for a much bigger and more aggressive assault? If you don't habitually license your IP on fair terms, you have a hard time convincing the courts that you're suddenly in favour of the idea: ditto if you're in the habit of aggressively pushing claims of questionable merit.

Most significantly, though, Microsoft has hired Marshall Phelps.

Phelps is the man credited with starting the software IP revolution, the idea that a company's intellectual property isn't just there to protect it but is a valuable, powerful asset that can earn money in its own right. He proved this at IBM, where he set up a division that now earns $2bn a year. Microsoft is desperate to find a solid revenue source to replace the mature cash cows of Office and operating systems: it is also very keen to rein its No.1 enemy, open source. Marshall Phelps will do both.

He's remarkably open about how, too. In a long interview with industry magazine Managing Intellectual Property late last year, he says: "You have all this R&D that hives off a whole bunch of IP. I can then take that and I can go license that to all-comers. When I do that, I create standards, I create relationships and I collect money." A policy, he says, that Microsoft will be spending $7bn a year promoting. He's out there lobbying Congress and the European Commission to make the legal environment more conducive to Microsoft's plans; he's realigning Microsoft's legal teams, he's overseeing, in his words, an acceleration in the patent engine. And is he getting support from the boss? "If you think about Bill Gates's job of chief software architect -- which is one he takes very seriously -- he's involved in these IP discussions all day long," says Phelps. "I spend a lot of time with him."

As for the patents Microsoft has been amassing, they are frightening in their scope. Storing documents in XML, using HTML outside a browser, double-clicking buttons, buffering network packets, text formatting -- you can check a list of a few hundred European patents here. Who knows how many patents will stand up to examination in court -- and it doesn't matter. The patent system -- which Microsoft has been so keen to extend to Europe -- is always on the side of the company with the most money.

Imagine that you're creating some new software: how will you make sure that nothing in it contravenes what Microsoft claims to own? For all practicable purposes, you cannot. You cannot afford to defend yourself against Microsoft: all you can do is sign a licensing deal -- even if you're Sun. And voila -- Microsoft gets a cut of everything you ever write. Free software becomes impossible: the Windows Tax has become a Software Tax.

The community is already reacting: the Public Patent Foundation has started the process of collating Microsoft's patents and forcing judicial reviews on those most obviously at risk from prior art. But Microsoft is issuing thousands of patents: it seems impossible to force a review of the company strategy, and picking at the patents one by one is like fighting a locust swarm with a fly swat.

So while HP's memo might have predicted Microsoft's attack phase a little too early, it's dead right on the campaign. The only question is when the first shots will be fired in the open: all the signs are that day will not be long in coming.

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