The patent tax, as SFLC called it, is based on the amount of money Microsoft has spent on settling patent infringement claims involving Windows and Office over the last three years as well as legal fees during the same period, divided by the estimated number of Windows installations.
SFLC quotes high-profile legal settlements including $1.5bn to Alcatel-Lucent, $1.25bn to Sun, $536m to Novell and $440m to Intertrust, calculating that patent claims have costs the company a total of $4.3bn over the last three years according to SFLC calculations.
That equates to $21.50 for every version of Windows installed in the same period, based on Microsoft estimates that suggest an installation rate of 200 million machines per year. The SFLC also estimates that the real figure could be higher, given a number of undisclosed settlements during the three years.
However, the figure could equally be an over-estimate, given that the $536m Microsoft paid Novell, and a significant proportion of the money Microsoft paid Sun, covered antitrust rather than patent infringement claims.
In comparison, the SFLC notes, Linux has a patent tax of $0 due to it having never been found guilty of patent infringement. While that statement it true, it does not take into account potential patent violations in Linux.
In August 2004, the IP insurance firm Open Source Risk Management said it had identified 287 potentially patented technologies in the Linux kernel, 98 of them owned by so-called Linux-friendly companies, and 27 by Microsoft, although it also noted that none of the patents in question had been tested in court.
More recently, Microsoft’s CEO, Steve Ballmer, has claimed that Linux infringes on the company’s intellectual property, fueled by the company patent covenant agreement with Novell.
That deal, which saw Microsoft and Novell agree not to sue each others’ customers for patent infringement, did not focus on any specific patents, but did see Novell agree to pay Microsoft at least $40m over five years, an undisclosed percentage of its revenue from open source products, with $108m heading the other way.
Our View
The SFLC is against software patents and its calculation of a $20 patent tax on Windows is designed to make the case to users that patent infringement claims are a price not worth paying. It is interesting to see how the figures break down compared to the number of operating system installations, but the SFLC’s argument is undermined by the organization’s readiness to include the $536m Microsoft agreed to pay Novell in November 2004 to settle antitrust claims in its calculations. The announcement of that deal specifically noted that it came with certain exclusions that include patent claims.
