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Microsoft licensing push shifts to start-ups

Software maker has previously focused much of its intellectual-property licensing efforts on larger companies.

Although Microsoft has focused much of its intellectual-property licensing effort on larger companies, the software maker is starting to see the benefits of working with start-ups too.

On Wednesday, the company announced Microsoft IP Ventures, a formal program to license technologies from its research efforts to entrepreneurs and small businesses.

The move follows an announcement last month that the company will license more of the technology developed in its research labs. At the time, Microsoft said it was licensing a machine learning technology to Inrix, a start-up that offers traffic prediction information.

Microsoft launched its overall intellectual-property push in December 2003, though until recently much of the focus was on deals with the largest tech companies.

"In the past, we've talked about cross-licensing, typically with large companies, or narrow licensing around protocols," said David Kaefer, Microsoft's director of intellectual-property licensing. "Here what we are talking about (is) licensing things that are almost standalone applications."

Kaefer said that the six-person IP Ventures unit will work with start-ups to make sure they not only get the technology they license but also that they get several months to work with the researchers who came up with the ideas.

"You can't just throw some patents and technologies over a wall," he said.

Kaefer stressed the difference between Microsoft's actions and recent moves from IBM, the rival on whom Microsoft initially modeled its IP licensing effort.

"Frankly, IBM has focused in the last few months on giving away technology," Kaefer said, referencing IBM's move in January to give the open-source community free use of 500 of Big Blue's patents.

"We see software as incredibly valuable," Kaefer said, adding that with the start-ups, Microsoft is engaged in commercial deals in which it typically gets either royalty payments, an equity stake or both. "When these companies succeed, Microsoft succeeds."

Among the 20 or so technologies that Microsoft said are available to start-ups are Wallop, a technology that creates social networks based on the people with whom a person is interacting, and LaunchTile, a navigation technology for mobile devices.

Microsoft touted support for its licensing effort from a number of venture capital firms, including Advanced Technology Ventures, OVP Venture Partners, Insight Venture Partners and MDV-Mohr, Davidow Ventures.

"OVP is excited to partner with Microsoft IP Ventures and get early access to the large portfolio of technology assets," Lucinda Stewart, partner at OVP Venture Partners, said in a statement. "In addition to the innovative technologies, we like the way Microsoft has structured the program to partner with entrepreneurs."