Microsoft Corp is expected to pay IBM Corp between $10m and $35m in settlement of the disagreement over operating system software royalties – the surprise being that it is Microsoft that has to make the balancing payment. The reason is that IBM was able to point to its portfolio of more than 1,000 patents on […]
Microsoft Corp is expected to pay IBM Corp between $10m and $35m in settlement of the disagreement over operating system software royalties – the surprise being that it is Microsoft that has to make the balancing payment. The reason is that IBM was able to point to its portfolio of more than 1,000 patents on basic software techniques – patents on which it has never before demanded royalties according to the Wall Street Journal. The two companies also reached terms on the royalties IBM must pay Microsoft for OS/2, but refused to disclose details – a Microsoft official suggested the royalties were roughly $20 to $25 a copy, but an IBM official told the paper that figure was too high. The settlement, announced over the weekend, unravels the contract signed between the two in 1990 on joint development of OS/2. Under the agreement, Microsoft will continue to provide IBM source code for versions of Windows released before September 1993, and source code in development at that date. IBM will give Microsoft source code for versions of OS/2 up to that date. Both companies are licensed to use this source code in their products for as long as they choose. Agreed royalties will be paid for the use of each others’ code for an agreed period of time. After September 1993, IBM and Microsoft will not exchange any newly developed source code. Microsoft will license the Windows NT product to IBM under standard hardware manufacturer terms, at IBM’s option, for use on IBM systems. Microsoft claims that it will be very, very difficult for IBM to maintain compatibility with Windows after September 1993 under the agreement, but IBM disputes that inference. Microsoft will continue to get royalties from IBM on Windows code for five years after September 1993. Microsoft reckons it has sold 14m copies of the two releases of Windows 3; IBM claims over 700,000 copies of OS/2 2.0.