April 12, 2004

Music DRM

Microsoft Settles InterTrust Patent Suit

NEW YORK (Reuters) - Microsoft Corp. (NasdaqNM:MSFT - news) will pay InterTrust Technologies Corp. $440 million to settle a lawsuit over anti-piracy technology for digital music and movies, the companies said on Monday, lifting a legal cloud hanging over Microsoft's media strategy.

The deal gives Microsoft a license to InterTrust patents and resolves all outstanding legal action between the companies. InterTrust is owned by an investment group that includes Sony Corp (news - web sites). (6758.T) and Philips Electronics (PHG.AS)

Microsoft said the settlement will speed the development of anti-piracy services -- known in the software industry as digital rights management, or DRM -- that protect music and movie studios from theft by online file sharers.

"This is an important agreement in that it reduces uncertainty for the industry," said Will Poole, a Microsoft senior vice president, in a statement posted on the company's Web site.

Microsoft shares rose 22 cents to $25.70 in morning trade on Nasdaq.

For Microsoft, the agreement comes just 10 days after a much larger settlement with Sun Microsystems Inc. (NasdaqNM:SUNW - news). In that deal, Microsoft agreed to pay $2 billion to Sun as the companies lined up against threats from the popular Linux (news - web sites) operating system.

Santa Clara, California-based InterTrust, a pioneer of software used to control digital distribution rights for media ranging from software to music, sued Microsoft three years ago.

"Today's announcement validates InterTrust's intellectual property portfolio as seminal to advancing DRM and trusted computing in the marketplace," said Talal Shamoon, chief executive officer of InterTrust.

Microsoft deputy general counsel Marshall Phelps said the deal "reaffirms Microsoft's commitment to the importance of intellectual property rights."

Posted by Craig at April 12, 2004 06:09 PM