Weblog:   Is the SCO suit only the beginning?
Subject:   Even Microsoft limits it's liability
Date:   2003-07-26 18:00:31
From:   nzheretic
In comparing the Microsoft EULA to the GPL, Microsoft's EULAs are pretty uniform when it come to exluding themselves from liability...



Also, Microsoft disclaims that this software will not infringe on the intellectual property rights of others. This is a potentially serious issue, as has been recently shown through the legal dispute between Timeline Inc. and Microsoft. Timeline has won a recent ruling which exposes all Microsoft SQL Server developers to a serious patent encumbrance.


The Timeline Inc case bring up an important issue; while no vendor can expected to identify all potential patent violation when developing software, when the vendor does purchase and license technology from a third party, the vendor should insure that the end user/develop is not put at further risk.

Even Microsoft's May 27th changes which apply only to customers under enterprise licensing contracts, which Microsoft claims grants greater immunity, contains loop holes which greatly negate Microsoft's liability.

The new section 6 clause contain exceptions

Our obligations will not apply to the extent that the claim or
adverse final judgment is based on (i) specifications you provide to
us for the service deliverables; (ii) code or materials provided by
you as part of service deliverables; (iii) your running of the
product, fix or service deliverables after we notify you to
discontinue running due to such a claim; (iv) your combining the
product, fix or service deliverables with a non-Microsoft product,
data or business process; (v) damages attributable to the value of
the use of a non-Microsoft product, data or business process; (vi)
your altering the product, fix or service deliverables; (vii) your
distribution of the product, fix or services deliverable to, or its
use for the benefit of, any third party; (viii) your use of our
trademark(s) without express written consent to do so; or (ix) for
any trade secret claim, your acquiring a trade secret (a) through
improper means; (b) under circumstances giving rise to a duty to
maintain its secrecy or limit its use; or (c) from a person (other
than us or our affiliates) who owed to the party asserting the claim
a duty to maintain the secrecy or limit the use of the trade secret.
You will reimburse us for any costs or damages that result from
these actions.

Loophole #1
"(ii) code or materials provided by you as part of service deliverables"

This would effectively still indemnify Microsoft against most of the Timeline Inc patent claims, as it is the developer/end user's code ( even visual basic code ) which would be in violation of Timeline's patent claims.

Microsoft has a history of licensing third party code and patents in such a manner that still leaves developers and users exposed to IP threats. Even going back to the LZH/GIF Unisys patents,


"Microsoft Corporation obtained a license under the above Unisys LZW patents in September, 1996. Microsoft's license does NOT extend to software developers or third parties who use Microsoft toolkit, language, development or operating system products to provide GIF read/write and/or any other LZW capabilities in their own products(e.g., by way of DLLs and APIs)."


Microsoft also licensed database technology for Microsoft's SQL server from Timeline Inc, under similar license terms as did with Unisys. This license did not grant Microsoft the right to sublicense to third party developers to extend functionality, in some cases even restricting the use of visual basic. Unlike companies like Oracle Corporation and others, Microsoft chose a cheaper option for the license which left third party developers, users of Microsoft SQL Server,Office and other Microsoft products at risk of being sued by Timeline Inc for violation of Timeline Inc patents. Timeline Inc asked Microsoft to upgrade to a similar license used by Oracle, but Microsoft refused, so the whole issue went to court and in 2002, Timeline Inc won.

How many other cases exist where Microsoft has included third party technology in it products, but has also taken the cheaper licensing option and left developers and even users exposed to the threat of lawsuit? Due to the closed nature of the proprietary business model, how can third party developers even check?

Other loopholes such as based on the use of non-Microsoft products must raise antitrust issues.