Settling down?

When he took over as Microsoft's top lawyer in early 2002, Brad Smith knew he was taking on a busy schedule. But he probably didn't expect it to be this busy.

After heading the negotiations that convinced nine state attorneys general to end their antitrust battle with Microsoft, Smith took on the task of hammering out an accord to resolve an antitrust lawsuit with AOL Time Warner that dates back to that company's acquisition of Netscape Communications.

Smith is up to his knees in legal briefs connected to the company's challenge to the antitrust fine the European Union levied late last month. Smith, who is also a senior vice president at the company, spoke with CNET News.com about Microsoft's decision to settle its long-running legal battle with Sun Microsystems.

Q: Why did the settlement with Sun take so long?
A: In some ways, I think the biggest challenge was figuring out how to do what we wanted to do. Steve (Ballmer) was right--it's complicated stuff. It's made more complicated when you have people that don't have a lot of background on working closely together.

There is one thing that is unmistakably clear: We're very committed to working in a collaborative and responsible way with the industry.

All that takes time. It did take this kind of time to get where we are today.

What patent issues are involved in interfacing with Windows Client and Windows Server? Are there areas you can point to, where there are patent roadblocks to interoperability?
There were a lot of patent issues we needed to think through, both with respect to interoperability but also with respect to other areas where we might want to collaborate. Certainly, there are a lot of patents in our products--Windows Client, Windows Server, .Net, Office. There are a lot of patents in their products, Solaris, Java. One important part of this, as Steve was saying, is thinking through how to address the patent issues.

But were there specific patent issues in interoperability?
Yes, there are. There are communications protocols for which we have patents. If you talk about interoperability between .Net and Java, you're talking about patents that are important on both sides, and so Steve made an important point: You can't get the broad and deep collaboration we're aiming to accomplish without sorting through the intellectual property questions.

This agreement illustrates what happens when two companies with sophisticated intellectual property portfolios and intellectual property legal representation get together and hash things out. When you look at Microsoft and the Linux community or the open-source community, things get very different. How do you expect to interact with the open-source community when it comes to dealing with protecting your patents?
It's a big world; it's a diverse world; and there's obviously a lot of room for everybody. From our perspective it is important for everybody to respect and play by the same rules. We believe fundamentally that intellectual property protection encourages innovation, encourages research and development. It creates jobs--it helps grow the economy. We're not averse at all to interacting with the entire development community, but we do hope that everyone will respect the intellectual property rights that others have.

You have a mechanism for dealing with an intellectual property tangle with Sun. What happens if you see something you have a patent on appearing in Linux?
I don't want to talk about any specific product. What I would say is we've learned a lot from this exercise. It's taught us some new things about how to understand each other's concerns and work creatively to address them. It also underscores our willingness to license our intellectual property rights to others on reasonable terms, just as Sun has done with respect to us. There I think is a fundamental recipe that offers something worth considering for the world as a whole.

Will this settlement help your case with the European Commission?
I think the European case has a life of its own, at this point. I think that it's good news that we were able to reach an agreement with Sun. I think it underscores our commitment to achieve interoperability. Given all that, I don't think that the fundamental dynamic of the case is going to change, because it is now the European Commission that is proceeding, and they'll make up their own minds, based on their own assessment of the situation.

Did the settlement talks with the European Union help bring about the Sun deal?
I don't think that the settlement negotiations played a significant role. I do think that the hearing that took place in Brussels in November was a constructive process for all of us. It gave us another opportunity to hear from the people at Sun. It was helpful for us to understand their concerns in a more focused way.

I'd like to think that maybe it was also for them to hear our concerns. I think that we learned from that process. I'm disappointed that we couldn't reach an agreement with the European Commission, because I think that this kind of agreement today really demonstrates one important fact: When you can really work out the details (in a settlement), you can fundamentally make a lot more progress.

I think the European case has a life of its own, at this point.

I do hope that there is some opportunity for us to now go to work with this and show all the good things that can result from it.

Steve mentioned that the Sun deal started with a golf game. Have Steve and (RealNetworks CEO) Rob Glaser had a golf game yet?
Not to my knowledge. I don't know everybody Steve plays golf with.

I know it's at an earlier stage, but does what you've learned from this give you any thoughts to what you might be able to accomplish with a company like RealNetworks?
I think that we have to take it one step at a time. This is a really important day for both Sun and Microsoft. It's also a day that follows a number of weeks where we haven't gotten any sleep. I think we'll take a few days to get caught up on our sleep. It does take two to tango, but I think that having reached agreement with AOL Time Warner last year and Sun this year, there is one thing that is unmistakably clear: We're very committed to working in a collaborative and responsible way with the industry.

You've obviously only had a few days to look at the EU ruling. Is there anything in the text of the ruling that makes you more or less concerned?
I'd rather not get into that today. We're obviously studying the decision carefully. We'll have the opportunity in the legal process to articulate our point of view.