Microsoft Agreement with InterTrust Paves Way for Accelerated Development and Adoption of Digital Distribution Technology

Will Poole, Senior Vice President, Windows Client Business.

REDMOND, Wash., Apr. 12, 2004 — As part of an ongoing commitment to customers and business partners, Microsoft Corp. and InterTrust Technologies today announced an agreement that resolves all outstanding legal issues between the two companies. The agreement, which involves payments of US$440 million to InterTrust by Microsoft to resolve patent issues, enables Microsoft to reaffirm its commitment to its customers and industry partners, stand behind its products, and obtain the third-party intellectual property rights necessary to build more robust and complete Digital Rights Management (DRM) solutions.

To learn more about the new agreement between Microsoft and InterTrust, PressPass spoke with Will Poole , senior vice president of the Windows client business at Microsoft.

PressPass: Why the decision now to settle with InterTrust?

Poole: DRM solutions are essential to secure valuable personal, business and commercial content in an increasingly connected digital world. Licensing these patents enables Microsoft to pursue more rapid innovation in the growing field of DRM, while reducing the risk of future disruption for customers. Microsoft is now in a position to implement a broad set of rights-management solutions for digital media, and is taking steps on all fronts to assure customers that we have the intellectual property rights necessary to stand behind our products.

PressPass: What does this agreement mean for customers and industry partners?

Poole: When crafting this agreement we had two goals: first, we wanted to make sure our customers could continue to use Microsoft products as they are intended to be used; and second, we wanted to make sure that our industry partners could continue to build great products that utilize the DRM functionality in our platform offerings. We think the agreement achieves both these goals. Although there are some partner development scenarios not covered in the agreement, we have a system in place to explain those scenarios to partners if they would like more information. That said, this agreement gives Microsoft developers, and partners who build on Microsoft platform technologies in normal or expected ways, rights to InterTrust intellectual property that they would have not had access to outside of this agreement. The result, we feel, will be a more robust, accelerated growth in DRM innovation.

PressPass: So this agreement is about DRM technologies? What does this announcement mean to the DRM industry?

Poole: This is an important agreement in that it reduces uncertainty for the industry, and will ultimately speed the development of comprehensive DRM solutions for customers and partners. Our recently announced agreements with Time Warner and Disney are examples of our commitment to collaborate with partners across a broad set of products and services that utilize digital rights management and security capabilities.

PressPass: Why is there a need for DRM technologies?

Poole: The need for strong digital rights management (DRM) technology has increased due to vast improvements in streaming media and compression technology. High-quality audio and video are now a reality on the Web, on portable devices, the PC and on various consumer electronic devices throughout the home. With DRM, content owners have an effective tool for managing the distribution of their content on the Internet with far more flexibility than simply having copy-protection systems.

PressPass: What is Microsoft doing in this area?

Poole: Microsoft’s rights management software is designed to help content owners quickly and easily offer their assets online. The result is that content owners can build or grow their businesses, and consumers can enjoy high-quality digital content in a convenient and legal way.

Finally, outside the area of digital audio and video, businesses increasingly want solutions for protecting their intellectual property — which might be reflected in Microsoft Outlook messages, Microsoft Word documents or Microsoft PowerPoint presentations. Microsoft’s DRM technologies extend to protect this type of content as well.

PressPass: You recently announced an investment in ContentGuard, another DRM company. Why also license this technology from InterTrust?

Poole: There is no single patent that covers all intellectual property issues associated with DRM technology. Although ContentGuard owns critical IP related to DRM, other parties hold relevant IP as well. It’s important for Microsoft to find a way for DRM systems to interoperate, and, as evidenced by these agreements, Microsoft is working with others in the industry to overcome barriers to establishing reasonable and flexible standards and then bring these solutions to market.

Clarifying IP ownership, resolving pending litigation, and pushing ahead with new DRM innovations to allow digital content to flow more freely helps content owners establish workable, sustainable business models.

PressPass: If industry partners want to better understand this agreement and its impact on them, where should they go?

Poole: We are hopeful that most partners will have the information they need through this and other publicly available information. If, after reviewing that information, partners still have questions, they can choose to contact Microsoft at [email protected] to request a copy — under NDA — of relevant portions of the agreement between Microsoft and InterTrust.

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