Microsoft Offers IP Protection for Open Source elements of Azure

In February 2017, Microsoft announced expanded IP coverage for its Azure cloud service.  This move follows in the footsteps of earlier open source indemnity pledges by companies Red Hat, Novell and IBM.

Microsoft describes the program:

“Azure IP Advantage is a program for Azure customers offering best-in-industry protection against intellectual property risks, so developers can focus on coding and customers can focus on running their businesses, with reduced risk and exposure to IP lawsuits without diminishing customers’ own IP rights. It has three components to help customers protect their cloud investments:

  1. The ability to pick from 10,000 Microsoft patents to help defend against an IP lawsuit
  2. Industry leading uncapped indemnification for IP lawsuits, including open source incorporated into first-party Azure branded services
  3. A springing license to any Microsoft patent that is transferred to non-practicing entities

Some eligibility requirements apply.”

Microsoft’s IP indemnity (the Azure Advantage Program) is described in the Azure Terms of Service that issued on February 1, 2017.   Essentially, it is part of Microsoft’s general indemnity coverage for IP claims regarding Azure, but Microsoft notes it now does not exclude open source elements.  Coverage would therefore include Hadoop, but “Open source that is provided under a separate license, such as a Linux distribution in a VM, is not covered by Microsoft’s terms.”  This is perhaps an elegant way to exclude any GPL software — which would by definition be covered by a separate license.

The terms and conditions of this IP protection say a few interesting things.

  • The coverage applies to “Qualified Customers” that have spent $1000 per moth during the prior three month period on Azure, excluding resellers of cloud services like Google, Amazon and IBM.
  • It contains a springing patent license (LOT-Style) in the event Microsoft sells a patent to a patent troll. That license covers the customer’s products running on Azure.
  • It promulgates a list of Azure-related patents that are available for sale by Microsoft — presumably for use for defensive purposes — if the customer is sued by a patent plaintiff accusing products deployed on Azure.  It is limited to one per year, per lawsuit, per customer.  (This brought to mind for me a video game where you get to pick one weapon at the start.  But here, you can’t trade up or earn the others.)

Overall, this is an interesting move by Microsoft, and equally interesting is the scanty press coverage it got.  Earlier pledges regarding Linux by companies like Red Hat made a big splash, but those happened many years ago.  Some readers will react with ironical skepticism, given Microsoft is one of the biggest patent licensors for (read, “claimants against”) Linux, and those claims arguably made some of those original pledges a commercial necessity.

But there is no moral high ground in indemnities.  They are a commercial necessity, or they are not, depending on the circumstances.  Microsoft’s FAQ and marketing announcement are laced with phrases like “unlike some of our competitors” — that do not offer the same coverage.  This step by Microsoft shows that IP indemnities are a potential commercial advantage in the the cloud services wars, which are the commercial free-for-all of the decade.

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