This post was authored by Jim Ross, Assistant General Counsel, Intellectual Property Group, Patent Conflicts and Indemnities Team
One of the most frequent questions our customers ask us is how they can protect themselves from the risk of litigation, especially when it comes to their innovations in the cloud.
I understand why this stands out as a growing concern for our customers. I’m responsible for managing these kinds of “patent conflicts” for our customers. Over the past three years, we’ve received a growing number of cloud patent assertions directed at both Microsoft and Azure customers, with an average of 100 new patent conflicts annually.
For Microsoft and our customers, we’re seeing increased aggression from non-practicing entities (NPEs), commonly referred to as “patent trolls,” looking to capitalize on vulnerabilities in the cloud. These companies hold patents but have no intentions of developing them or creating a product. Take one recent example – we’ve had extensive dealings over the last year and a half with a litigious NPE that had sued multiple high-tech companies and asserted that it had approximately 1,000 patents and patent applications in the U.S. and worldwide. That NPE had also approached Microsoft in late 2015 and asserted that our use of open source software in Azure infringed its patents. A year later, two of our customers were also contacted by the same NPE for patent infringement as an extension of Azure services. We engaged with the NPE to assess its allegations and resolved the matter in a way that protected our customers.
Unfortunately, these kinds of episodes look to become more and more commonplace. While 2016 and 2017 have seen declines in overall patent litigation, one sector is experiencing an uptick in IP litigation – and that’s in the cloud. NPEs are stockpiling cloud technology patents. IPLytics reports that NPEs are acquiring cloud patents at an increased rate of 130 percent since 2011. These increases in cloud-based IP lawsuits and NPEs acquiring cloud patents threaten to block the innovation of software developers coding for the cloud and to business and enterprises that are already on the cloud or moving to the cloud.
Seeing this trend, our customers want to know what they can do to better protect themselves, especially when it comes to innovations in the Azure ecosystem. The good news is that by working with our customers through our existing indemnification demonstrated to us that we needed to do more to provide customers with IP risk mitigation strategies in the cloud.
Those conversations became the key reasons why Microsoft developed Microsoft Azure IP Advantage. Microsoft has offered indemnification protection to our customers for years, and now, we’ve responded to the concerns of Azure customers and are extending our traditional IP indemnification to protect customers using open source technologies that power many Azure products and services today. Through the work of the Microsoft legal team, we have over two decades of experience dealing with patent infringement lawsuits and allegations and a strong history of helping our customers face infringement risks.
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 on the Azure IP Advantage webpage.