Microsoft scraps clause in licensing contracts for PC firms

Microsoft is to scrap a clause in its licensing contracts with PC manufacturers that prevents them from enforcing any hardware...

Microsoft is to scrap a clause in its licensing contracts with PC manufacturers that prevents them from enforcing any hardware patents they have that may have implications for software.

The so-called non-assert clause will be removed from all licensing agreement renewals for the Windows operating system from August.

"We recently reviewed this provision again after receiving comments on it from some of our original equipment manufacturer customers and have decided to delete the provision in its entirety from the next round of OEM contracts," said Microsoft spokesman Tom Brookes.

He denied that investigations of Microsoft by European and Japanese competition regulators led to the scrapping of the clause. "It's coincidental," he said.

Hardware manufacturers such as IBM, Dell, Hitachi and Toshiba have signed these non-assert clauses because they cannot afford to offer computers without Windows, said Thomas Vinje, a partner in the Brussels office of the law firm Clifford Chance, and whose clients include Dell and Fujitsu.

Vinje claimed the clause acted as a big disincentive for OEMs to innovate. For example, if IBM patented a method for speeding up the operations of a computer, the company would not be able to enforce that patent to prevent Microsoft or any other competing hardware manufacturer from using the technology.

"The commission has looked at these clauses in the past but it has never issued a ruling," Vinje said.

In 2001, the commission closed an investigation of the non-assert clause after Microsoft reached a settlement with an unnamed British OEM that sparked the investigation by complaining to the European competition regulator.

"We briefly looked into the patent-related clause as a result of a complaint in 2000 by a company that had a patent-related dispute in the US, but did not pursue the case as it was settled between the companies concerned," commission spokeswoman Amelia Torres said.

The commission's inquiry into Microsoft Windows licensing agreements with hardware manufacturers could still form the basis of a separate antitrust investigation, even if the non-assert clause is scrapped later this year.

The letters to the 22 OEMs also asks them about clauses in their contracts with Microsoft which, the Commission suspects, are designed to create obstacles to open-source software.

"There are several provisions in the contracts that are designed to act as road blocks to open-source software running on PCs," Vinje said. "The commission also asked about these."

There is no timeframe for the commission's investigation.

The inquiry is separate from an antitrust lawsuit being conducted by the commission. The antitrust case focuses on Microsoft's policy of bundling its audio-video Media Player software into successive versions of Windows.

The commission has accused Microsoft of abusing the dominant position of Windows to foreclose the market for multimedia software. It also accuses Microsoft of abusing its dominance of PC-operating system software into the market for low-end server operating systems.

Paul Meller writes for IDG News Service

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