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Microsoft Says It Has Licensed Intellectual Property To A Startup, A Company First

Inrix, whose software can predict traffic patterns, lands a deal with its Redmond, Wash., neighbor.

Microsoft is making its intellectual property available for the first time to a new company, part of a broader effort to license its patents more aggressively.

The world's largest independent software company said today it will license patents for statistical analysis and data visualization to Inrix, a Redmond, Wash., company being launched today to aggregate and deliver data that can help drivers predict traffic patterns by glancing at a mobile phone or PDA. Inrix, formed by two former Microsoft employees, said it has exclusively licensed three Microsoft technologies: SmartPhlow, software for mobile devices that helps visualize real-time data; JamBayes, a Bayesian statistical analysis engine for traffic flow prediction; and ZoneZoom, intellectual property related to navigating maps and personalized data presentation on mobile devices. Neither company would disclose the royalty arrangement.

David Kaefer, director of business development in Microsoft's intellectual property and licensing group, says the deal reflects Microsoft's recognition that the technology industry is moving toward more openness in companies' licensing of IP. "For Microsoft, this is a huge area of focus right now," he says. "For a long time, people saw Microsoft as a company that kept its technology and IP pretty close to the vest. We're trying to become a different company and to prove it deal by deal."

In December 2003, Microsoft introduced a new licensing policy for intellectual property. While the company has licensed its technology for years, it recognized at that point that making its technology more accessible would benefit both itself and its partners. The company invested nearly $7.8 billion in research and development during its 2004 fiscal year, which ended last June. But it has a licensing gap. Last year, the company spent roughly $1.4 billion to license intellectual property from large companies--plus a few small ones in the digital-rights-management market, Kaefer says. It made substantially less than that licensing its technology to others. While he wouldn't disclose actual figure, Kaefer says Microsoft's intellectual-property licensing revenue last year was less than that of its mobile and embedded devices unit, which generated $247 million in revenue.

According to Kaefer, not every great idea fits Microsoft's business objectives. "They can, however, provide great opportunities for somebody else."

Inrix's founders, CEO Bryan Mistele and chief technology officer Craig Chapman, formerly worked in Microsoft's mobile and embedded devices group. Using Inrix's data, drivers should be able to see traffic problems as they're occurring and plan accordingly, Mistele says. The company says its system considers such variables as weather conditions, construction schedules, holidays, sporting events, and historical traffic patterns. "It allows us basically to tell the future," he says.

In addition to the Microsoft deal, the startup also disclosed $6.1 million in venture-capital funding Monday. More than 3,000 pilot users are testing the technology in Seattle using Microsoft Smart Phones. Eventually, says Mistele, Inrix's data will be available through other avenues including online travel sites, satellite radio, in-car navigation systems, and handheld navigation devices.

Microsoft unveiled several other licensing deals Monday. Ascender Corp. has licensed Windows fonts and plans to adapt them for non-Microsoft products in various languages. And companies including D-Link Systems, Lexar Media, I-O Data Device, GoVideo/Opta Systems, M-Systems, and SMC Networks have licensed intellectual property that they can use to simplify the setup of wireless networks. In February, Nokia licensed Microsoft's Exchange Server ActiveSync protocol so that its wireless customers can synchronize their mobile devices with Exchange.

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