Patent spat forces businesses to upgrade Office

Microsoft tells customers worldwide they may need to install updated software after it loses a patent dispute in court.

Microsoft has begun e-mailing its corporate customers worldwide, letting them know that they may need to start using a different version of Office as a result of a recent legal setback.

The software maker said Monday that it has been forced to issue new versions of Office 2003 and Office XP, which change the way Microsoft's Access database interacts with its Excel spreadsheet.

The move follows a verdict last year by a jury in Orange County, Calif., which found in favor of a patent claim by Guatemalan inventor Carlos Armando Amado. Microsoft was ordered to pay $8.9 million in damages for infringing Amado's 1994 patent. That award covered sales of Office between March 1997 and July 2003.

"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," Microsoft said in an e-mail to customers. "As a result, Microsoft must make available a revised version of these products with the allegedly infringing code replaced."

Although existing customers can keep using older versions on current machines, any new installations of Office 2003 will require Service Pack 2, released by Microsoft in September. Office XP will need to be put into use with a special patch applied.

Microsoft is also recommending that customers update their existing software with the new code.

"We understand that this will create an inconvenience for a small percentage of our customers and are committed to working with them through the process and easing the inconvenience as best as possible," Sunny Jensen Charlebois, a Microsoft senior product manager, said in a statement to CNET The company is readying an all-new version of Office, code-named Office 12, that is due out later this year.

Microsoft would not say how many customers are affected, but said it is likely only a "small fraction" of Office users. However, the company appears to be requiring all companies to use the new version from now on, so most large organizations could be affected by the move.

The software maker started notifying customers this month, in an e-mail sent via its sales channel. All those affected will have been informed by next month, Microsoft said.

The company said the necessary downloads are available from its Web site.

Gartner analyst Michael Silver said it is hard to estimate the cost to customers, but said it is a significant impact for companies to move to a new service pack of a major program such as Office.

"It's probably a multimonth effort" for companies that want to double-check that key databases and critical Excel macros all work, Silver said. The other option is to "roll the dice" and just switch to the new software, but "most companies don?t want to do that with critical resources," he added.

The question for companies, though, is if they are exposing themselves to potential legal liability if they don't quickly move to the new software. Microsoft promises to indemnify customers from third-party patent claims, but Silver said the license terms also require customers to "immediately" move to any new noninfringing version that Microsoft releases.

"Immediate is pretty quick," Silver said. "It would be nice if there was some sort of time line that says you have to do it within six months or a year."

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