Microsoft today announced that it would provide indemnification to users of its Azure cloud services who get sued for patent infringement. Fear of intellectual property litigation has the ability to curtail innovation, in this case due to companies’ concern about adopting Microsoft’s Azure service.
Microsoft Azure IP Advantage will provide uncapped legal coverage to the customers using open-source technology on the Azure cloud infrastructure. It’s a benefit already provided to customers who use Azure for developing apps with Microsoft technology.
Using IP Assets
In the increasingly competitive cloud marketspace, this is a business differentiator, an example of management using its IP assets for business advantage. Many companies are unaware of the power of the intellectual property they already own and how they might use it to drive new business.
In a fiercely competitive industry like cloud computing, guarding those IP assets often becomes the battle cry. But what happens when your product is used to develop thousands of other products—and without those thousands of other products, you would cease to exist? If this is the case, then opening up your patent portfolio and providing anything necessary to keep production moving is the new way into battle.
Examining the Corporate Strategy
Use of IP collateral to drive corporate strategy is a function many companies have yet to wrap their heads around. The general use of a patent portfolio has traditionally been to create new products or to defend the company from infringement claims through the ability to cross-license. The rise of Non-Practicing Entities (aka trolls) or others bringing litigation against innovators using protected technology has cooled the jets for many smaller companies. Without those innovators using Microsoft technology to create new software, Microsoft itself feels the sting.
With this protection from indemnification, smaller companies are now free to continue innovating. In addition, as Microsoft’s Chief Legal Officer Brad Smith has noted, this is expected to be particularly important for non-tech companies that are starting to use technology in their businesses but have not “armed themselves with a passel of patents.” Of course, they have to spend over $1,000 per month on Azure products to enjoy the benefit of Microsoft’s protection. That monthly fee, plus the security of businesses continuing to develop products with Microsoft technology? That’s a win-win, even if the tech giant might have to spend a little time in court now and then.
Could other cloud providers duplicate this Microsoft strategy? Amazon has 7,000+ U.S. patents, not an insignificant number. But Microsoft has 50,000+ patents. Unless Amazon can convince its customers and potential customers that its patents are more targeted at the cloud space, then Microsoft’s most risk-adverse cloud customers are probably going to go with the guy with the bigger “gun.”
Investigate Your Strategy
While this particular move may not be the best option for every business, it does seem to cover Microsoft nicely. Who knew that volunteering to protect developers from patent trolls and others would be a good business move? This use of IP knowledge may not be the best move for you, but knowing and understanding the breadth and depth of your patent portfolio is always a winner.
Consider contacting us for a strategy session, so we can help you make sense of the IP in your current portfolio and how you might use that information to drive your business forward. There are so many different ways to use your intellectual property knowledge—as Microsoft has clearly proven here.
