Microsoft is denying that its CEO Steve Ballmer told Asian government leaders on Thursday that Microsoft believes that Linux violates more than 200 software patents.

Instead, Ballmer was citing a controversial study done earlier this summer by a risk-mitigation consultancy that claimed that Linux has been found to violate more than 200 software patents, according to a Microsoft spokesman.

"Steve (Ballmer) was speaking at the Asia Government Leaders Forum (in Singapore) and noted the recent OSRM (Open Source Risk Management) report in answer to a question he was asked on Linux and licensing costs," said the Microsoft spokesman. "It wasn't in the context or perspective of 'Microsoft saying this,' but rather 'here's what the industry is saying and it is a factor to consider.'"

A published report claiming that Ballmer said Microsoft believes Linux violates 228 or more of software patents created a quite a stir across the Web on Thursday.

According to the story, Ballmer did not go so far as to say Microsoft planned to sue Linux vendors or customers over the alleged violations. However, he did note that "someday, for all countries that are entering the WTO (World Trade Organization), somebody will come and look for money owing to the rights for that intellectual property," according to the report.

In August, OSRM, a provider of open-source consulting and risk mitigation insurance, announced it had unearthed 283 issued, but not yet court-validated, software patents that could conceivably be used in patent claims against Linux. OSRM is planning to begin offering a patent-litigation insurance policy for Linux users and developers in 2005.

Microsoft has not weighed in publicly on whether it has discovered patent violations by open-source vendors involving any of its products. But the Redmond software vendor, like a growing number of corporations, is availing itself of a variety of tools for monitoring the source of its own source code, Microsoft officials said.

David Kaefer, Microsoft's director of business development for IP and licensing, told Microsoft Watch earlier this month that Microsoft has been creating process controls to ensure that Microsoft knows from where its own code is coming. Microsoft has created a number of tools and is licensing others that will allow the company to make sure that there is no hidden code (open-source or otherwise) in its products that shouldn't be there, Kaefer said.

Microsoft is likely investigating the opposite scenario, as well: Whether Linux violates any Windows or other Microsoft patents.

Microsoft officials said earlier this year that Microsoft is planning to submit 3,000 new patent applications in fiscal 2005 (which commence on July 1), and is expecting to be granted 1,000 patents during that same period.

Go to Page 2 to Read More on Microsoft's Growing Patent Obsession

("Microsoft Rattles The Patent Sabers" Page 2)

Microsoft officials have stated repeatedly that the company's increasing focus on patents is fueled by two forces: Furthering industry cooperation and reducing future patent-related litigation.

Microsoft is working to sign broad cross-licensing deals with the top 30-50 companies in key industry segments, such as telecommunications and consumer electronics, that overlap with the industries in which Microsoft participates. "This is one of the most important ways to reduce litigation," Kaefer said. "The top companies are responsible for as much as 80 percent of the relevant patents" in the industry these days.

"We don't think we'll ever be in the position IBM is," in terms of the amount of money it makes from its IP war chest, Kaefer said. "But we will be closer to breaking even" as a result of consciously growing the Microsoft patent portfolio.

But in some cases, Microsoft is using patents as a scare tactic, one source claimed.

Out in the field, "Microsoft is telling customers that there are between 26 and 28 (Microsoft) patents that conflict with Linux," said one software executive who requested anonymity. And Microsoft sales folk are using this factoid —
whether accurate or not — to dissuade key customers from going open-source, he said.

Kaefer, when asked earlier this month about this claim, said: "Typically, the (Microsoft) sales force doesn't deal with any patent issues. But sometimes, the sales force can get involved, like it did in (helping to facilitate) the Microsoft (patent cross-licensing) deal with Siemens."
In other cases, Microsoft is hoping to head off open-source vendors at the pass by patenting technologies to which they might want and need access in the future, said a Microsoft partner, who requested anonymity.

This partner said Microsoft already has applied for 30 to 40 patents for WinFS, the Windows file system that will likely debut as part of Longhorn Server in 2007. And if Microsoft succeeds in patenting enough of these technologies, they may well patent something that open-source vendors will want, but will likely only be able to get through a commercial license.

(This story includes information which originally appeared in the November 8 and November 15, 2004, issues of the Microsoft Watch newsletter. Want to see what other Microsoft news nuggets you might have missed? Sign up today for a free two-week trial subscription to Microsoft Watch.)