Microsoft to target IP licensing at start-ups

Expanding its efforts to monetize its intellectual property holdings, Microsoft Corp. has set up a group within its licensing business to sell Microsoft technologies to startups.

Inrix and Ascender, both companies that were founded last year, are among the first takers. Inrix is building a traffic information service with exclusively licensed technologies from Microsoft Research and Ascender has obtained rights to adapt and sell various Windows fonts developed by Microsoft, according to a Microsoft statement.

The move is part of Microsoft’s transformation from a “trade secrets” company to one that shares its intellectual property (IP). In licensing its inventions, the Redmond, Washington, software maker likened itself to institutions such as Xerox’s Palo Alto Research Center and Lucent Technologies’ Bell Laboratories.

“They all reached a point in their maturation where they said: ‘We’ve just got a lot of ideas that we are not doing enough with. Why keep them on the shelves? Let’s put them out there and allow people to create commercial opportunities,'” said David Kaefer, a director of business development at Microsoft.

Many of Microsoft’s previous IP deals have been cross-licensing agreements with large companies such as SAP, Cisco Systems, Siemens, Hewlett-Packard, and IBM. Microsoft is now also focusing on smaller companies, Kaefer said.

“We have a group now in our IP licensing practice focused exclusively on this startup segment,” Kaefer said. “Primarily these are technologies that are not core to Microsoft products that might be the basis for an entire business.”

Inrix was founded by former Microsoft and Expedia employees. It has licensed technologies that will let it build a traffic information system that can predict conditions based on variables including weather, construction schedules, school times, sporting events and historical data, Chief Executive Officer Bryan Mistele said on Friday.

The agreement between the two companies, both based in Redmond, Washington, is exclusive. Financial details are not being disclosed, but Mistele said Microsoft will get a percentage of its revenue. “We both have a mutual interest in that Inrix succeeds,” Microsoft’s Kaefer said.

While it has had its share of IP litigation, Microsoft is a proponent of patents and sees them as an important part of the industry. Opponents have called patents an obstacle to innovation.

“While some people see intellectual property as a brick wall, we see it as an important form of currency that grows new companies and provides new opportunities,” Kaefer said.

Last year, Microsoft Chairman and Chief Software Architect Bill Gates announced that the company planned to file 3,000 patent applications in its current fiscal year, which ends in June. As of late last year, Microsoft held about 3,600 patents in the U.S. and more than 1,000 in Europe. It also has several thousand patents pending.

In 2003 Microsoft hired IBM veteran and IP licensing expert Marshall Phelps as corporate vice president and deputy general counsel of intellectual property to bolster its IP licensing practice.