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The British government is poised to license world-beating intellectual property to Microsoft "for a song," according to British civil service sources. Discussions concerning the deal for the IP, which is associated with the controversial Government Gateway project Microsoft is currently involved in, are going ahead despite the apparent cooling of the relationship between Redmond and the Office of the e-envoy Andrew Pinder, who is charged with getting British government online by 2005.

When the Gateway project was announced earlier this year at a Microsoft conference in Seattle, plans to sell the system to other governments were mooted. Kablenet.com, for example, reported Jenny Duff, industry manager, public sector, for Microsoft, as saying that Microsoft and the Cabinet Office were in talks regarding how to exploit the intellectual property rights of the Gateway.

The contract being negotiated with Microsoft will produce a revenue stream for the British government, in exchange for which Microsoft will have the rights to sell the IP worldwide. "But the deal is hopelessly lopsided," said one source. "The revenue is not that much, just a couple of million projected for the first year, and it ties us to a company that does not have a good reputation."

Unfortunately for Microsoft, this chimes more than a little with Andrew Pinder's observation some months back that "people expect the government to be above suspicion," as he virtually ruled out using Microsoft's Hailstorm. Much suspicion has indeed surrounded the Pinder-Microsoft relationship, and that could spell the death of the IP deal.

But it is our understanding that the deal is very close to signing off. Amusingly, one of the things slowing it up has been the question of what it is that's actually being licensed. The UK does not recognise patents for business processes, and at least some of this stuff involves business processes. They're not so scrupulous in the US, but you can see how it might puzzle the UK government's lawyers.

Aside from the glass bead level of income involved and the somewhat squalid reputation of the proposed business partner, the counter-revolutionaries in Whitehall object to the deal because they have no confidence in Microsoft's ability to make the most of the IP, and because there are far more appropriate companies who employ far more people in the UK who could be worked with. As one points out, Microsoft UK is a relatively small operation, whereas IBM UK employs 19,000 people. From the point of view of local employment, global sales force, sheer competence and multi-platform skills, IBM would be far more appropriate as custodian and evangelist for this technology, he argues. ®

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