Microsoft Patent Loss Translates Into User Pain

About one in four businesses will have to update Microsoft Office because the Redmond, Wash.-based developer lost a patent lawsuit, an asset management company said Monday.

The update stems from a 2005 verdict in a California patent claim brought by Guatemalan inventor Carlos Armando Amado. Microsoft was ordered to pay $8.9 million in damages for infringing on a patent Amado created while a graduate student at Stanford. The patent was awarded for software designed to link spreadsheet data between multiple Microsoft programs.

Last week, e-mails were sent by Microsoft alerting corporate users that updates must be applied for any new deployment of Office 2003 and Office XP; the updates change the way that Microsoft's Access database interacts with Excel.

"It was recently decided in a court of law that certain portions of code found in Microsoft Office Professional Edition 2003, Microsoft Office Access 2003, Microsoft Office XP Professional and Microsoft Access 2002 infringe a third-party patent," read the e-mail. "As a result, Microsoft must make available a revised version of these products with the allegedly infringing code replaced."

Microsoft's requiring that users install Office 2003 SP2 -- which was released last fall -- for all future deployments of Office 2003, and roll out a patch for all future installs of the earlier Office XP. Existing users can continue to run unpatched versions, but Microsoft's encouraging them to update anyway.

According to Ottawa-based AssetMetrix, 22 percent of North American business PCs with Office will need updating. Of those running Office XP or Office 2003, 68 percent will need the patch or service pack.

"This is quite a significant amount of affected installations," said Jeff Campbell, the chief executive of AssetMetrix, in a statement.

Analysts at Gartner noted that most companies will need to take some kind of action, even though "installing this additional code is a legal, rather than technical, requirement."

"Relatively few companies are likely to be in the middle of an Office deployment that includes Access 2002 or 2003," wrote analysts Michael Silver and Alexa Bona. "However, most refresh a portion of their PC installed base each year and re-image broken PCs on a daily basis, and this likely constitutes a new installation." Silver and Bona also listed a number of recommendations in their online brief, including foregoing Access for users who don't need it as a "quick alternative to installing the new code" and request that Microsoft deliver a patch for Office 2003 SP1 so companies don't have to test and deploy an entire service pack.

Another analyst, Paul DeGroot of Directions on Microsoft, put the blame for the update on a lawsuit-happy society. "This is evidence of how litigious people are generally," he said. "It's quickly becoming part of the overall trend toward patenting and various intellectual property issues."

This is a first for Microsoft; the company has never had to release an update to an existing product for strictly legal reasons. "It's particularly awkward because its an update to an existing release rather than one incorporated in a future release," DeGroot noted.

Cases like this also explain Microsoft's patent push. "Microsoft files patent [applications] as a form of self-protection. Even if the idea doesn't have a huge value to anyone else, they patent it anyway, because they don't want someone down the road coming and saying it's theirs."

In the first five weeks of 2006, for instance, Microsoft was awarded 139 patents by the U.S. Patent and Trademark Office, a pace that would put nearly twice as many new patents in the company's portfolio as in 2005, when Microsoft was awarded 788.