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Ruling threatens developers' wallets

In a move that could force fees on developers working with Microsoft's SQL Server software, a judge says Microsoft can't sublicense another firm's patents to SQL Server customers.

In a ruling that could force royalty fees on some developers working with Microsoft's SQL Server 7 data-management software, a Washington state judge said Microsoft could not sublicense another company's patents to SQL Server customers.

Seattle, Wash.-based Timeline is trumpeting an order released last week that confirms a 1999 licensing agreement between it and Redmond, Wash.-based Microsoft that bans sublicensing of Timeline's patents. The contract essentially prohibits third-party developers from creating customized technologies dependent on Timeline's patents without paying royalties. Microsoft had argued that it should be allowed to sublicense the technology to its customers.

Timeline's cover SQL Server development related to two components, the analyst services cube, which is a database within SQL Server, and DTS (data transformation services), a way to bring data into the relational database side of SQL. Timeline has licensed the patents to companies including Oracle, Hyperion Solutions and Sagent Technology.

Although he couldn't put an exact figure on it, Timeline CEO Charlie Osenbaugh said a "significant" number of companies and developers could be affected by the ruling.

"Any developer on SQL Server 7 should get an attorney to take a look at that patent" to make sure there's no infringement, Osenbaugh said. The company charges royalty fees for use of its technology that consist of either a one-time flat fee ranging from $250,000 to $5 million, or a continuing payments of 5 percent of the retail value of each sale of a product based on the patented technology.

Microsoft downplayed the impact of the order, which it said was crafted with the cooperation of both companies. Microsoft spokesman Jim Desler said companies that use SQL Server without adding customized code would already be covered by the licensing agreement and therefore would not be affected by last week's order. Desler said even companies that add their own customized code would not see an impact if their code is not related to Timeline's patents.

"Under the terms of the order, which were agreed upon by Timeline and Microsoft, even customers that add code could fall within the protection of the license between Timeline and Microsoft," Desler said.

The order stems from a Microsoft filed in 1999, which asked a court to allow it to sublicense Timeline's technology at no cost to third parties planning to add customized programs to SQL Server. Although Microsoft won at the trial court level, higher courts disagreed, sending the case back to the lower court.

Last week, in possibly the final ruling in the case, a King County Superior Court judge ordered Microsoft to respect the terms of the contract, meaning that any partner adding certain code to SQL Server would have to honor the patents of Timeline.