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Microsoft And Salesforce.com Settle Cloud Patent Case

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Microsoft and Salesforce.com agreed to settle their respective patent-infringement lawsuits against each other

Microsoft announced on 4 Aug. that it has settled its patent-infringement cases with Salesforce.com, marking the end of what promised to be a protracted legal affair and a symbolic battle over the future of the cloud. Earlier this summer, both companies had filed intellectual-property lawsuits against each other.

With regard to the intellectual property at stake, the terms of the agreement seemed complementary. “Salesforce.com will receive broad coverage under Microsoft’s patent portfolio for its products and services as well as its back-end server infrastructure during the term,” read a 4 Aug. statement issued by Microsoft. “Also as part of the agreement, Microsoft receives coverage under Salesforce.com’s patent portfolio for Microsoft’s products and services.”

But Microsoft is also being compensated by Salesforce.com, although neither company disclosed an exact dollar amount. In the wake of the announcement, both companies’ spokespeople took a conciliatory tone.

Conciliatory Tone

“We are pleased to reach this agreement with Salesforce.com to put an end to the litigation between our two companies,” Horacio Gutierrez, corporate vice president and deputy general counsel of Intellectual Property and Licensing at Microsoft, wrote in a statement. “Today’s agreement is an example of how companies can compete vigorously in the marketplace while respecting each other’s intellectual property rights.”

Salesforce’s own statement was much more succinct. “Salesforce.com is pleased to put this litigation behind us,” Jane Haynes, the company’s vice president of Communications, wrote in a statement emailed to eWEEK.

That marks quite a change from May, when Microsoft filed its initial lawsuit alleging infringement of nine patents, and Salesforce CEO Marc Benioff, during an earnings call, referred to his new opponent as a collective of “patent trolls” and “alley thugs.”

Salesforce then filed suit against Microsoft on 24 June, alleging that Microsoft infringed on five of its patents, and the conflict between the two companies seemed on-track to become a true battle royale. Salesforce also retained David Boies—who originally represented the Justice Department in its landmark suit against Microsoft—as counsel.

Battle For The Cloud

A number of analysts felt the animosity between the two companies highlighted the growing importance of the cloud for both the enterprise and consumers. “The stakes are getting bigger and bigger,” Ray Wang, an analyst with the Altimeter Group, said to eWEEK in a 28 June interview. “In the battle for the cloud, the two leaders are going to be Salesforce and Microsoft. Microsoft’s Azure is on the .NET side of the war, while Salesforce is the Java side. So you’re going to have drama.”

Wang also felt such conflicts were a mark of the cloud’s growing popularity. “This is going to continue; it’s part of doing business here in the Valley,” he said. “Litigation is part of the process as things get ultra-competitive. As the lines between enterprise and consumers blur, that means a huge volume of users, and that’s the key here in many ways.”