Microsoft, Salesforce.com Settle Patent-Infringement Suits

Aug 4th, 2010 | By technologynews | Category: Technology

Microsoft announced Aug. 4 that it has settled its patent-infringement cases with Salesforce.com, marking the end of what promised to be a protracted legal affair and a symbolic battle over the future of the cloud. Earlier this summer, both companies had filed intellectual-property lawsuits against each other.

With regard to the intellectual property at stake, the terms of the agreement seemed complementary. Salesforce.com will receive broad coverage under Microsofts patent portfolio for its products and services as well as its back-end server infrastructure during the term, read an Aug. 4 statement issued by Microsoft. Also as part of the agreement, Microsoft receives coverage under Salesforce.coms patent portfolio for Microsofts products and services.

But Microsoft is also being compensated by Salesforce.com, although neither company disclosed an exact dollar amount. In the wake of the announcement, both companies spokespeople took a conciliatory tone. 

We are pleased to reach this agreement with Salesforce.com to put an end to the litigation between our two companies, Horacio Gutierrez, corporate vice president and deputy general counsel of Intellectual Property and Licensing at Microsoft, wrote in an Aug. 4 statement. Todays agreement is an example of how companies can compete vigorously in the marketplace while respecting each others intellectual property rights.

Salesforces own statement was much more succinct.

Salesforce.com is pleased to put this litigation behind us, Jane Haynes, the companys vice president of Communications, wrote in a statement emailed to eWEEK.

That marks quite a change from May, when Microsoft filed its initial lawsuit alleging infringement of nine patents, and Salesforce CEO Marc Benioff, during an earnings call, referred to his new opponent as a collective of patent trolls and alley thugs.

Salesforce then filed suit against Microsoft on June 24, alleging that Microsoft infringed on five of its patents, and the conflict between the two companies seemed on-track to become a true battle royale. Salesforce also retained David Boieswho originally represented the Justice Department in its landmark suit against Microsoftas counsel.

A number of analysts felt the animosity between the two companies highlighted the growing importance of the cloud for both the enterprise and consumers.

The stakes are getting bigger and bigger, Ray Wang, an analyst with the Altimeter Group, said to eWEEK in a June 28 interview. In the battle for the cloud, the two leaders are going to be Salesforce and Microsoft. Microsofts Azure is on the .NET side of the war, while Salesforce is the Java side. So youre going to have drama.

Wang also felt such conflicts were a mark of the clouds growing popularity.

This is going to continue; its part of doing business here in the Valley, he said. Litigation is part of the process as things get ultra-competitive. As the lines between enterprise and consumers blur, that means a huge volume of users, and thats the key here in many ways.

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