Intertrust Suit Settled

Removing another stubborn opponent from its list of legal adversaries, Microsoft has paid US$440 million to settle a patent-infringement case brought by digital rights management (DRM) specialist Intertrust. Like the previous week’s deal with Sun Microsystems (see “Sun Deal Signed, Litigation Ends“), the Intertrust settlement solidifies Microsoft’s patent position, eliminates possible bad publicity from a trial, and could free up some of the company’s cash for other purposes. It also removes a possible obstacle to broader implementation of DRM, which is crucial to Microsoft’s digital media strategy and presents a long-term opportunity in the enterprise space.

More than 30 Products Disputed

Intertrust first sued Microsoft in Apr. 2001, alleging that Windows Media DRM violated an Intertrust patent covering the ability to secure content by including a digital watermark or fingerprint. By June 2002, Intertrust had amended its original complaint to allege that more than 30 Microsoft products and technologies—including Windows XP, Office XP and 2003, the .NET Framework, the DirectX graphics APIs, and the Xbox gaming console—violate 11 Intertrust patents related to DRM, security, and the creation of a trusted OS. In Jan. 2003, consumer electronics companies Sony and Philips, working through a joint venture called Fidelio, invested US$450 million in Intertrust, primarily in hopes of gaining leverage against Microsoft in the battle for DRM standards.