Microsoft's new weapon against Linux questioned

Microsoft says its IP indemnification provides better protection than that offered by rivals Red Hat and Novell - but not all lawyers agree
Written by Ingrid Marson, Contributor
Microsoft's latest defence of the Windows in which its chief executive Steve Ballmer claimed it provides better protection against legal action over patent violations than its open-source rivals, has been questioned by a legal expert.

In his email, sent to Microsoft customers and partners on Wednesday, Ballmer claimed that Windows was a better choice than Linux. His reasons included Microsoft's old favourites of total cost of ownership and security, but also included a relatively new weapon, IP indemnification.

Ballmer said that Microsoft offers uncapped protection for legal costs associated with an alleged IP infringement, something which he claimed is not offered by Linux vendors.

"Today, when a volume licensing customer - a business or organisation ranging from as few as five computers to many thousands - licenses a Microsoft product, we provide uncapped protection for legal costs associated with a patent, copyright, trademark or trade secret claim alleging infringement by a Microsoft product," said Ballmer. "No vendor today stands behind Linux with full IP indemnification."

But Richard Penfold, a partner in the IP practice of law firm DLA, told ZDNet UK that this email suggests that Microsoft is only providing assistance with legal costs, not damages.

"Microsoft's indemnity is really only half an indemnity," said Penfold. "It appears to only be offering assistance with legal costs, not damages."

Microsoft UK was unable to provide ZDNet UK with more information on its IP indemnification policy and whether this includes damages. It was not able to direct ZDNet UK to any public section on its Web site which went into more detail on the terms and conditions of its IP indemnification policy. Microsoft in the US is currently considering its response to a request for more detailed information about the issue of IP indemnification in relation to damages.

Penfold claimed that providing legal costs is not as costly as providing damages, as IP cases are generally settled out of court, while damages could be unlimited.

"An IP case will generally not go to court trial -- they will usually settle, in which case the legal costs are relatively small," said Penfold. "The potential damages in an IP case are almost unquantifiable -- if a large US corporation is using software and has to stop using it, it could bring some part of their business to a halt."

The main Linux vendors -- Red Hat and Novell -- both have IP indemnification policies which include damages and legal fees, although neither offer uncapped protection.

Red Hat provides a warranty to Red Hat Enterprise Linux customers with a guarantee that it will replace software if there is an intellectual property issue so they can continue using the product without interruption. It also has a fund which assists companies with legal expenses.

Penfold said that Red Hat's IP indemnification scheme appears to be more helpful than Microsoft's offering as it will replace software with non-infringing software and includes some legal expenses, although companies will probably not get all their legal costs paid.

Novell provides indemnification to customers of versions 8 and 9 of SuSE Linux Enterprise Server. It states that it will pay damages up to $1.5m for an allegedly infringing product and will pay legal defence fees.

Penfold said that, from the publicly available information on Microsoft's, Red Hat's and Novell's policies, Novell is the clear leader.

"I'm not sure if Microsoft is providing the best indemnity -- Novell's proposition appears to be the best," said Penfold. "Novell is offering up to $1.5m of actual damages. No-one else seems to be offering that and paying legal defence fees, though the legal fees [that Novell is offering] are not necessarily uncapped."

Update: Microsoft has since clarified its policy on IP indemnification, for the full story click here.

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