News

No Better Friend, No Worse Enemy

• By Scott Bekker
• April 29, 2008

The article was aimed at ISV executives who believe that their intellectual property (IP) can help Microsoft meet a need, and who expect to benefit from Microsoft's market-shaping power. The upshot: When meeting with Microsoft, those partners need to take steps to protect their IP.

At the time, Pender had to reach into the past for most of his on-the-record examples of ominous behavior by Microsoft. But a recent incident that Pender covered in his blog proves that the 2006 article still describes current reality.

The recent issue involves Avistar Communications Corp., a struggling company with videoconferencing software for enterprise desktops that could play a role in unified communications.

For a time, Avistar and Microsoft held amicable meetings. Avistar executives hoped to persuade Microsoft to license some Avistar IP in the software giant's emerging unified communications portfolio. Then, for whatever reason -- Avistar claims there was no warning; Microsoft just isn't commenting-negotiations broke down, and Microsoft challenged 29 Avistar patents, some dating back to the early '90s.

In March, Avistar announced the layoff of 25 percent of its work force, and in a highly unusual news release, blamed the decision on the cost to the company of fighting off the Microsoft patent challenge. According to Avistar, only a few of the patents Microsoft asked the U.S. Patent Office to review have anything to do with the technology Microsoft is interested in.

Only those who were in the room know the tenor of the discussions. Avistar has a history of patent litigation and had a hand in the ugly wars over entertainment industry IP, which didn't leave anyone involved looking too pretty.

None of this changes the fact that when Microsoft executives like what you're doing and don't want to get into that business themselves, things can be beautiful for partners. Microsoft has about a dozen high-quality programs helping ISV partners to do everything from qualifying prospects to marketing products. ISVs that leverage Microsoft's resources tend to be extremely profitable. The overwhelming majority of ISVs dealing with Microsoft tend toward this end of the experience spectrum.

The situation is reminiscent of the U.S. Marine Corps motto, "No better friend, no worse enemy." ISVs would do well to remember that the same slogan can apply to Microsoft. The tricky part, if Avistar is to be believed, is determining just which aspect of Microsoft your IP is going to trigger.