Microsoft, Samsung Patent Deal Includes Linux Coverage

While cross-licensing patent arrangements are common, the key to the deal between Microsoft and Samsung is that Samsung has so many patents, according to Samir Bhavnani, an analyst at Current Analysis. "And Samsung is one of the biggest and fastest growing consumer electronics companies in the world."
Two patent-holding giants, Microsoft Relevant Products/Services and Samsung, announced Thursday that they have entered into a broad cross-licensing agreement. In addition to allowing each to license the other's patents, the deal grants liability coverage to Samsung for Linux-related intellectual property that Microsoft contends it owns.

Samsung, which said it was the largest publisher of U.S. patents in 2006, will be able to use Microsoft patents across its product lines, including computer products, set-top boxes, media players, camcorders, televisions, and others.

The liability coverage, according to the companies, enables the Seoul, South Korea-based Samsung to use the Linux operating system in its products without the liability risk that Microsoft will sue it or its customers.

Microsoft will similarly be able to use Samsung's patents for computer-related and digital-media products. The financial terms were not disclosed, but the companies said that financial payments will be made to compensate both parties "for the value of their portfolios."

Novell Deal

Microsoft noted that, in the last 12 months, it has inked similar arrangements with such companies as Fuji Xerox Relevant Products/Services, NEC, Nortel, and Seiko Epson. Comparable Linux coverage was issued to Fuji Xerox and Novell.

Following the announcement of the Novell cross-licensing pact in November of last year, Microsoft CEO Steve Ballmer said that users of Linux were engaged in an unauthorized use of Microsoft's intellectual property. "Every Linux customer," he reportedly said at the time, "basically has an undisclosed balance-sheet liability." Members of the Linux open-source community protested his remarks.

After its deal with Microsoft created controversy, Novell took exception with Ballmer's interpretation. "Our agreement with Microsoft is in no way an acknowledgment that Linux infringes upon any Microsoft intellectual property," Ron Hovsepian, Novell President and CEO, said in a statement at the time. "When we entered the patent cooperation agreement with Microsoft, Novell did not agree or admit that Linux or any other Novell offering violates Microsoft patents."

The Open Invention Network (OIN), an alliance whose members include Sony, IBM, NEC, Red Hat, Philips, and Novell itself, has been obtaining patents or patent agreements to avoid any claims against those who use Linux. Launched in 2005, OIN makes its patents available, free of charge, to "any company, institution or individual that agrees not to assert its patents against the Linux System."

'So Many Patents'

Cross-licensing arrangements are common, said Samir Bhavnani, director of research at technology research firm Current Analysis. "But the key to this deal," he said, "is that Samsung has so many patents. And Samsung is one of the biggest and fastest growing consumer electronics companies in the world."

He also noted that Samsung does a lot of work with Linux. "Linux is in a lot more devices than people generally realize," he said. As for the Linux liability protection provisions, he contended that "people who file Linux lawsuits typically don't win."

The real impact of this deal, Bhavnani said, is that consumers and businesses "will probably get products in their hands faster than if this deal hadn't taken place."