Tech giants strike patent deal

Software major Microsoft and Japanese home technology firm Funai have struck an IP cross-licensing deal, granting each other access to agreed areas of their patent portfolios. Set to bolster the companies' mutual research and development (R&D) efforts in integrated media, the deal reflects the growing popularity of cross-licensing and patent pools in the technology field as key players aim to avoid IP disputes.

Funai's chief product line of LCD TV sets is sold across the US under several popular brands, including Philips and Magnavox. With that speciality in mind, the cross-licensing deal with Microsoft covers the consumer audio-video field. Under the terms of the deal, Microsoft is poised to benefit from Funai's LCD TV experience, while Funai will draw upon the wide range of patents that Microsoft has developed around its Extended File Allocation Table (exFAT) technology.

The Microsoft Developers Network (MSDN) – a web portal that advises software writers who are creating new applications with Microsoft technologies – describes exFAT as 'a new file system that is better adapted to the growing needs of mobile personal storage'. exFAT, it says, 'not only handles large files, such as those used for media storage, it enables seamless interoperability between desktop PCs and devices such as portable media devices, so that files can easily be copied between desktop and device. In addition, [it] can be adopted with minimal effort'.

In its announcement on the Funai deal, Microsoft points out that, since it launched its IP licensing programme in late 2003, it has 'entered into more than 600 licensing agreements and continues to develop programmes that make it possible for customers, partners and competitors to access its IP portfolio'. Among the IP partners it has signed with during the programme are Nikon, Olympus, Samsung and Pioneer.

Microsoft general manager of IP licensing David Kaefer said: 'Our patent portfolio reflects the innovation that results from the billions of dollars of R&D [that] Microsoft invests each year, and we are pleased to share access with an established leader such as Funai.' Meanwhile, Funai's IP licensing officer Kenji Sakata promised that the agreement would 'foster an even richer user experience' for its customers.

As R&D costs increase and legal action puts a greater strain on corporate resources, cross-licensing has become a cost-effective and amicable method for companies to explore and market new technologies. At its most prolific, cross-licensing results in patent pools, in which multiple corporations with interests in a specific standard will commit to licensing their relevant patents to each other. In this way, they will enhance access to knowledge and forestall the threat of patent disputes, improving speed-to-market and bringing legal costs under control.

One of the most significant recent developments in the patent pools arena concerns the long-term evolution (LTE) standard for wireless devices. In May last year, MPEG LA – an organisation founded to create a patent pool around the MPEG moving pictures standard – announced that it had launched a similar programme for LTE. The group's effort has so far attracted 12 LTE patent holders from five countries, all of which are now negotiating the pool's final structure and terms.