Microsoft: King of The Patent Hill

Microsoft emerges as top tech patent holder with more than 15,000 patents pending.

Similar to a stash of weapons a player might rack up during an online adventure game, high technology companies for more than two decades have racked up as many patents as possible.

Patents can come in handy, for instance, as a defense – or an offense—when one company sues another for patent infringement.

On the other hand, cross-licensing patents between two or more companies can cement business collaborations.

For years, IBM has been one of the most prolific tech companies in terms of piling up patents.

Now, it's Microsoft's turn.

The Institute of Electrical and Electronic Engineers' (IEEE) IEEE Spectrum magazine listed Microsoft as the leader in new patents awarded in 2006 in its November 2007 issue. In addition, intellectual property consultancy the Patent Board this week ranked Microsoft first on its Patent Scorecard of top IT patent holders.

The software titan has racked up a total of around 8,500 U.S. patents granted, the company said this week.

Microsoft also has more than 15,000 additional patents pending, and is applying for about 3,000 per year, according to a company statement. That's partly due to the company's aggressive R&D budget—a war chest of $7.1 billion in 2007 alone. While most of that money goes to creating products, it also yields a bounty of intellectual property.

"We pursue patents on only those inventions that are in line with our business objectives and have strategic value to the company," Bart Eppenauer, Microsoft's chief patent counsel and associate general counsel, said in a statement. "Close alignment with our business strategies, goals and priorities has enabled Microsoft to become the new standard bearer for patent quality in the technology industry."

Like virtually anything having to do with Microsoft these days, defending and protecting patents and other forms of intellectual property is highly controversial. Patents can, after all, be used as weapons and also as a means of intimidation.

Last year, CEO Steve Ballmer and other executives asserted that Linux vendors, especially Red Hat, are in violation of as many as 235 of Microsoft's patents – although the company would not disclose which specific patents it believes are being infringed upon.

However, that sword can cut both ways. Last year, Microsoft settled out of court with tiny Eolas Technologies, which holds a patent that lower courts found Microsoft had infringed upon with its Internet Explorer browser.

In November 2006, in one of its most controversial patent deals to date, Microsoft signed an IP cross-licensing and collaboration deal with Linux vendor Novell. The deal was roundly criticized by other members of the open source community who claim Novell sold out by joining forces with Microsoft.

Meanwhile, in September, the European Union's Court of First Instance upheld a European Commission (EC) order that Microsoft license IP, including patents, required for interoperability with its products to competitors.

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