Microsoft Extends Intellectual Property Protection to Millions of End Users

REDMOND, Wash., Nov. 10, 2004 — Microsoft Corp. today announced expansion of its end-user intellectual property (IP) protection policy to cover customers using a wide range of current and earlier versions of its software, such as the Windows Server System (TM) (including Microsoft SQL Server (TM) and Exchange Server), Microsoft
® Office System and the Windows®
client software. This change expands the company’s already strong commitment to volume licensing customers by extending the same level of protection to other end users.

“Customers have repeatedly told us that protection from IP claims is a fundamental issue of risk management and is essential for their IT solutions,” said Kevin Johnson, group vice president of the Worldwide Sales, Marketing and Services Group at Microsoft. “Our message to customers is clear: We stand behind you, and we stand behind our software.”

This protection, referred to as intellectual property indemnification, helps shield end users from exposure to legal costs and damage claims related to patent or other intellectual property disputes. It covers the four major forms of intellectual property disputes commonly associated with software: patent, copyright, trade secret and trademark. Microsoft has steadily expanded its IP protection based on customer feedback and a desire to ensure that customers have the peace of mind they deserve when selecting Microsoft software. In 2003 Microsoft lifted a monetary cap for volume licensees. Today, Microsoft extends its IP protection for covered claims from volume licensees to all end users of the company’s software.

Microsoft’s ability to offer strong protection is bolstered by the company’s commitment to managing the intellectual property rights in its software. This commitment includes development process controls, inbound licensing of necessary third-party rights, cross-licensing agreements with other industry leaders, and protection of Microsoft innovations through patent and copyright.

“Intellectual property indemnification is important and companies should ask their providers to be specific about the coverage they offer,” said Al Gillen, research director for System Software at IDC. “Customers should recognize that this coverage is not automatic, and if provided, will be spelled out by a corporate policy or licensing or use terms of use agreements.”

Customers Cite Protection as Important

High-profile cases have brought greater industry awareness to the importance of IP management. Kodak v. Sun and Intertrust v. Microsoft showcased patent claims that resulted in large monetary awards or settlements. Microsoft’s recent suit with Eolas Technologies Inc., and Microsoft’s willingness to help protect Dell Inc. and Gateway Inc. when Lucent Technologies filed a patent suit against their use of Microsoft touch-screen technology, are additional examples of the complex and real nature of IP issues in the industry today. Customers are looking for vendors that are willing to stand behind their products and help protect them from these kinds of risks. Concern about legal risk was one reason Regal Entertainment Group and ADC Telecommunications selected Windows over Linux for their recent IT solutions.

“Microsoft really stands behind its products. Their coverage lets me focus on running the business and not waste time worrying about the potential disruption and costs of IP disputes,” said J. E. Henry, CIO of Regal Entertainment Group.

“We simply aren’t interested in having to worry about potential legal risks of deploying Linux in this environment,” said Jamey Anderson, manager of Local Area Network Services at ADC Telecommunications Inc. “Knowing the way that Microsoft stands behind its products, it’s one less thing that I have to worry about.”

Increasingly, customers ask how Microsoft’s protection compares with that offered by leading open-source and Linux vendors. Microsoft offers stronger IP protection than leading Linux vendors, as is shown in an independent report on indemnification recently published by the Yankee Group, a global IT analyst firm.

“To date, IBM, HP, Novell, Red Hat and other Linux vendors offer only limited indemnification against intellectual property legal claims with exceedingly low liability caps — or no protection against third-party legal claims at all — leaving companies with the risk of high-cost litigation,” said Laura DiDio, senior analyst at the Yankee Group.

To address customer questions and communicate the benefits of Microsoft’s IP protection, Microsoft will begin an advertising campaign supported by independent third-party analysis. Additional information on Microsoft’s expanded IP protection offering can be found on Microsoft’s Get the Facts Web site .

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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