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Are your SQL apps street-legal? MS sues over key patent

A patent used in SQL and Office app development is Timeline's: does MS have sub-licensing rights?

Microsoft has filed a breach of contract lawsuit against a company holding a patent which is used in SQL Server 7 and MS Office 2000. The company - Timeline, Inc., of Bellevue, Washington, struck a licensing deal with Microsoft over the patent just last month. There would seem to be quite a lot going on under the covers here. Announcing the deal with Microsoft last month, Timeline president and CEO Charles Osenbaugh said: "We believe that the licence negotiated with Microsoft clarifies Timeline's rights to its technology and patented inventions which apply to the automated generation of data marts." Timeline was issued the patent, which "describes a process of accessing, transforming and summarising data for financial reporting," in September of last year. Timeline views it as "a 'pioneer patent' in certain aspects of automating the generation of data marts," and has been taking steps to fight what it sees as its corner. The company said last month it expects heavy litigation fees in connection with patent protection over the next few years, and currently has actions outstanding against Sagent and Clarus Corporation. The company adds that "there are a number of 'parties of interest' whom Timeline will research and take such actions as it deems appropriate." By granting a licence to Microsoft last month, Timeline clearly intended to win Microsoft's acknowledgement of its title to the technology. Considering that both of the Microsoft products covered were shipping by the time the deal was announced, it's probably fair to presume that some white-knuckle negotiation preceded the agreement. In Osenbaugh's view an important part of the deal was that "Microsoft has renounced any claim of ownership interest in Timeline's patent and pending patents," and he added: "Our inventions, which are the subject matter of the patent, occurred prior to Timeline developing software on behalf of Microsoft." This gives us an idea of how the patented technology happened to get into SQL and Office 2000, and of the nature of the claims and counter-claims the MS and Timeline lawyers would have been making up until the June deal. Presumably developers were already using the patented technology prior to the agreement, in which case their legal position must have been somewhat murky. Microsoft now claims that the licence it gained from Timeline in June included the ability "to sublicense it to customers, independent software vendors and solution providers who use Microsoft technology in the creation of data warehousing and/or business intelligence solutions that extract data from business systems, transform the data and prepare it for reporting and analysis." In a statement yesterday the company said: "Microsoft believes Timeline... has breached its June 1999 contract with Microsoft by refusing to acknowledge that the agreement entitles Microsoft's customers to create their own products with Microsoft's licensed technology." Considering what Timeline has said about the patent, and about its plans to realise its value, it would seem unlikely that the company intended to give Microsoft sub-licensing rights (although what the licence says could well be a different matter). If Microsoft is able to sub-license, then Timeline won't be able to derive any revenue from any applications developed for SQL and Office 2000, and that would only look like a smart business move if Microsoft's licence fee had been extremely substantial. On the other hand, Microsoft does have a need to offer SQL and Office developers technology that doesn't come with third party licence claims rattling along behind, so it also seems unlikely that MS would have struck a deal without taking this into account. There's clearly a lot more to this than meets the eye - care to drop us a line, anyone? ®

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