Leading Analysts Cite Intellectual Property Indemnification as Emerging Issue for IT Customers

REDMOND, Wash. Feb 10, 2005 — Microsoft Corp. today announced further evidence from independent analysts, including new noncommissioned research from IDC and Forrester Research Inc. confirming that Microsoft’s end-user intellectual property (IP) protection policy provides customers with strong protection from patent and other intellectual property disputes. In a recent report,* leading IT market research and advisory firm IDC stated that in addition to offering customers high levels of legal and financial protection, Microsoft’s recently expanded protection policy is easy for customers to understand and engage with. In addition, Forrester Research** found that Microsoft has arguably one of the strongest indemnification policies in the industry.

According to Stephen Graham, group vice president of Global Software Business Strategies at IDC, “Recent media focus on industry intellectual property disputes has brought the issue of indemnification to the forefront, and all signs point to this issue continuing to grow in significance. End users would be well advised to carefully review all software contracts to assess potential exposure, including the extent of coverage provided by vendors for legal costs and damages and the specific criteria for engaging this protection.”

In addition, Julie Giera, vice president of Forrester Research, said, “By expanding protection to average consumers, Microsoft has set a precedent that should help protect the investments of its customers — protection not currently offered by other vendors.”

These analyst reports, along with the additional industry and vendor emphasis on IP management and customer IP awareness, validate Microsoft’s leading IP protection offerings. They also shed light on the significant changes taking place in the industry around the value of IP. Customers are calling for IP protection and requiring vendors to limit their IP risk. Vendors need to properly manage intellectual property and provide that protection for customers when they make strategic technology investments.

“Customers are increasingly telling us that intellectual property protection is a very real concern. Our message to them has been consistent: We stand by our products,” said Martin Taylor, general manager of the Platform Strategy Group at Microsoft. “Our indemnification policy helps assure our customers that they are not unnecessarily exposing themselves to IP problems by using Microsoft®

Customers Cite Indemnification as Important

Indemnification is increasingly becoming a consideration for organizations making strategic technology investments. Brown University’s Center for Alcohol and Addiction Studies (CAAS) and Department of Psychiatry and Human Behavior recently cited IP protection as a factor in their decision to deploy Microsoft Windows Server (TM) 2003.

“After projecting the costs and benefits of Linux and Windows®
platforms, we found the Microsoft solution to be the most cost-effective,” said Rick Smith, network manager for Brown University’s CAAS and Department of Psychiatry and Human Behavior. “The strong IP protection means that Microsoft will stand behind the products if we should ever find ourselves embroiled in a third-party lawsuit — something absent with open source vendors.”

“Dealing with software implementation on a daily basis, it’s great to know that Microsoft’s intellectual property protection is available both for us and for our customers,” said Mark Clayman, senior vice president of Service Delivery for NaviSite.

Microsoft Offers Expanded Intellectual Property Protection

Microsoft recently expanded its end-user IP protection policy to cover customers using a wide range of current and earlier versions of its software, such as Windows Server System (TM) (including Microsoft SQL Server (TM) and Exchange Server), the 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. The policy 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.

Additional information about Microsoft’s expanded IP protection offering addressing customer questions and communicating policy benefits can be found at http://www.microsoft.com/getthefacts .

A direct link to the terms of the corporate policy can be found at http://www.microsoft.com/windowsserversystem/facts/indemnification/default.mspx .

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

* Source: IDC, “Microsoft Augments Intellectual Property Indemnification,” IDC #32467, December 2004.

** Source: Forrester Research, “Microsoft: Protecting Its Customers,” Julie Giera, Forrester Research, December 2004.

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