Microsoft Patents Change Hands

Several patents previously held by Microsoft (MSFT - Analyst Report) are expected to change hands. Microsoft acquired the patents from Silicon Graphics and subsequently sold them to Allied Security Trust (AST) at a private auction. AST is expected to resell the patents to Open Invention Network (OIN). The patents purportedly relate to Linux open source technology, which is the reason for the interest in them.

OIN consists of member companies such as RedHat (RHAT), International Business Machines (IBM - Analyst Report), Phillips and Novell (NOVL), which use open source technology in their products. OIM licenses the patents but typically does not resell them.

AST is in the business of acquiring patents from owners, licensing the technology back to them and ultimately selling off the patents. The member firms include big names in the technology space, such as Motorola (MOT), Cisco Systems (CSCO - Analyst Report), Sun Microsystems (JAVA), Hewlett Packard Co. (HPQ - Analyst Report), Verizon Wireless (VZ - Analyst Report), Google (GOOG - Analyst Report) and LM Ericsson Telephone Co. (ERIC - Analyst Report).

For a long time now, Microsoft has been complaining about Linux software violating its patents and even filed suits against companies using the Linux-based software for the offense. The outcome of such suits has been varied. The recent allegation against navigation device maker, TomTom NV for instance, was settled out of court.

The company has also started licensing out these patents to firms distributing or using open source software. This seems like a smart thing to do since it enables Microsoft to generate some revenue from the open source segment as well.

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