Microsoft is to extend its intellectual property (IP) protection to all licensed users of the bulk of its software. Previously the IP indemnification was only available to volume licensees, but now the company says it will protect all its users in the event of disputes arising over patents, copyright, trade secrets and trademarks. It has also lifted the monetary cap on the guarantee.

The software giant says the move is designed to give customers peace of mind when using Microsoft products, but it has also used the announcement as an opportunity to attack its open source competitors. It warns that few other companies, including big players like HP, Novell and IBM, offer similarly strong protection.

In an FAQ on its website, the company states:

Microsoft recognizes that some people are comparing the indemnification or IP warranty offers that companies like IBM, HP, Novell and Red Hat are making for their Linux products, and we encourage them to do so. The level of protection offered by each company varies significantly.

and

Red Hat's intellectual property warranty makes no promise to cover a customer's legal expenses, which, according to a recent paper by Sidley, Austin, Brown & Wood LLP, "An Indemnity Primer for IT Consumers," can be between $500,000 and $4 million alone -- even before a finding of fault.

A report from analyst house Yankee Group provides some support for Microsoft's position. It states that while owners of proprietary software are protected from IP disputes, "indemnification in the Linux and open source world is a very iffy proposition" because of the difficulties of guaranteeing non standard code.

Indeed: even Microsoft's extended IP protection has its limits. Microsoft says that in embedded industry or task-specific software, where distributors have permission to alter the code, it cannot offer the same IP protection.

The Yankee report's authors do acknowledge that the chances are remote that a company will be the target of a third-party lawsuit, like SCO's efforts against IBM, DaimlerChrysler and AutoZone: "It’s about the same chance that the average taxpayer gets audited by the Internal Revenue Service", it says. ®

Related link

The press release from Microsoft.

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