Microsoft Azure IP Advantage: A closer look at the ‘patent pick’

Feb 16, 2017   |   Erich Andersen

A few days ago we launched Microsoft Azure IP Advantage, a new program to help Azure customers reduce their intellectual property risk in the cloud so they can focus on innovating.  We’ve received an overwhelmingly positive response to the program so far and have quickly found fans for all three elements: expanded indemnification, the “patent pick” and the springing license benefit.

One aspect that has received a lot of attention and some questions is the patent pick, especially as some patent analysts publish reports that validate the strength of this feature.

The basic offer of the patent pick is straightforward; Microsoft will make available a list of 10,000 patents (download here) that qualified Microsoft Azure customers can choose from to help them defend against patent lawsuits brought by operating companies against their cloud service offerings that run on Azure. We chose the patents on the list to broadly represent a large and robust subset of our overall portfolio when viewed through a technology, geography and life-of-patent lens with a slightly higher percentage of cloud-oriented patents included for good measure.

How good are the patents? Two leading independent patent consulting firms, TechInsights and HighTech Solutions, studied the portfolio recently and issued reports, found here and here. TechInsights says that if the cloud-oriented piece of the Microsoft Azure IP Advantage patent portfolio were owned by one company it would be the third best in the world, trailing only Microsoft’s entire portfolio (ranked #1) and IBM’s entire portfolio (ranked #2). Similarly, HighTech Solutions concluded that the Azure Advantage portfolio contains “many patents and patent applications that cover technologies critical to the future evolution of Cloud infrastructure, services, and security.”

So, why did we create Azure IP Advantage? The answer is simply that we talked to developers, large and small, and they told us that as they would value this offering as a feature of Microsoft Azure. Our customers are looking to develop new apps and services of their own and they want their cloud partners to help them smartly manage risk. This is why Microsoft has developed a broad, trusted cloud framework and why we developed this Azure IP Advantage program – it’s about customer needs.

Getting a right to pick a patent from this portfolio is obviously helpful when one is confronting a lawsuit, but there is a broader benefit that we see as significant for a very broad array of Azure customers who might never have such a need. And that is this: mere access to the patent pick right provides a significant deterrent benefit for customers even if they don’t ever need to pick a patent. Companies thinking about suing Azure customers will have to pause and think twice about it because those customers will have access to the patents in this portfolio to defend themselves.

There is another deterrent effect in the way the program is designed as well. Our program terms state that in order to have access to the patents, a customer must confirm that it has not sued anyone else for patent infringement relating to cloud services running on Azure for a period of at least two years. This term creates an incentive for companies to refrain from suing for patent infringement in the Azure ecosystem because they know they would have to forego the patent pick benefit for a period of time if they were to assert. At the same time, our terms do not take IP rights away from our customers – it’s simply a benefit of the patent pick that is at risk of a company decides to sue.

To learn more, hear about Microsoft Azure IP Advantage from some of our early preview customers and see how Azure IP Advantage works, see our animated video. If you’re an Azure customer, you can learn more here.

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