[Ip-health] Microsoft's compulsory license - royalties at .25 to 5 percent.

[James Love]

Not health care, but an example of the use of a recent compulsory
license by the US government.  And, (of course) exports are permitted.
The royalties run from .0025 to .05 of the competitor's net sales on the
product using the Microsoft protocol technology..  Jamie


http://members.microsoft.com/consent/info/LicenseOverview.aspx
http://members.microsoft.com/consent/info/LicenseAgreement.aspx
http://www.microsoft.com/presspass/press/2003/aug03/08-01ProtocolLicensingProgramPR.asp

<SNIP>

A new royalty structure, calculated as a simple percentage of the
licensee's revenues from products incorporating Microsoft's protocol
technology. Depending on the functions they wish to enable, licensees
can elect to license some or all of the protocols supported in Windows
2000 Professional and later client operating systems. For many
functions, royalties are set at 1 percent of the licensee's revenues
from the software product incorporating the protocol technology. All of
the more than 100 protocols available under the MCPP can be licensed at
a royalty of 5 percent of the licensed product revenues. Royalty rates
on Microsoft protocol technology used in embedded hardware products
range from 0.5 percent to 2.5 percent. All royalty rates are subject to
minimum and maximum fees per licensed unit, except certain embedded
products, which are not subject to a minimum fee.

---------------------------------------

*Microsoft Announces Additional Improvements To Protocol Licensing Program*

*Changes Include Simplified, Low Cost Royalty Structure and New License
Terms*

*REDMOND, Wash. - Aug. 1, 2003 -* Microsoft Corporation today announced
that improvements to its Communications Protocol Licensing Program are
now available to existing and prospective licensees. In response to
industry and government feedback, Microsoft has established a
simplified, low-cost royalty structure and adopted new licensing terms
that are more favorable to prospective licensees.

The new royalties and licensing terms will be posted on the Microsoft
Communications Protocol Program (MCPP) website
<http://members.microsoft.com/consent/info> and are effective
immediately. Existing licensees may convert to the new MCPP terms and
pricing at their option any time. The prior MCPP license terms will also
be available through September 30, 2003 as an option for new licensees.

Microsoft established the MCPP in accordance with the final judgment in
Microsoft's antitrust case with the Department of Justice and a number
of State Attorneys General. Under the program, third party developers
can obtain licenses to protocol technology developed by Microsoft as
part of its Windows family of client and server operating systems.
Developers can implement Microsoft's protocol technology in their own
server products to improve interoperability with Windows. The MCPP was
released in August 2002. To date, EMC Corporation, Network Appliance
Inc., VeriSign Inc., and Starbak Communication Inc. have taken licenses
to implement Microsoft's protocols in their products.

"Given the unprecedented scope of the program and complexity of the
technology, we knew it would be important to obtain feedback from
government and industry on ways the program might be improved. The
changes announced today should make the program more appealing to
software developers," said Microsoft Senior Vice President and General
Counsel Brad Smith.

Changes to the MCPP include the following.

    * New licensing terms that address industry feedback relating to
      licensee review of Microsoft's technology at the outset of the
      licensing process, the timing of updates under the program,
      licensees' rights regarding independent development of protocols,
      and logistical aspects of the program.
    * A new royalty structure, calculated as a simple percentage of the
      licensee's revenues from products incorporating Microsoft's
      protocol technology. Depending on the functions they wish to
      enable, licensees can elect to license some or all of the
      protocols supported in Windows 2000 Professional and later client
      operating systems. For many functions, royalties are set at 1
      percent of the licensee's revenues from the software product
      incorporating the protocol technology. All of the more than 100
      protocols available under the MCPP can be licensed at a royalty of
      5 percent of the licensed product revenues. Royalty rates on
      Microsoft protocol technology used in embedded hardware products
      range from 0.5 percent to 2.5 percent. All royalty rates are
      subject to minimum and maximum fees per licensed unit, except
      certain embedded products, which are not subject to a minimum fee.
    * Reduced royalty prepayments -down from $100,000 to $50,000. The
      prepayment, standard in industry for protection of intellectual
      property and trade secrets, is required only upon signing a
      license agreement, which occurs after a company has had an
      opportunity to review significant disclosure of technical
      information concerning Microsoft's protocol technology.
    * The scope of the license has been extended without any increase in
      the royalty rate. In addition to Windows 2000 and Windows XP and
      future operating systems, the license will now cover
      communications with any Windows legacy client such as Windows 95
      and Windows 98.

Microsoft also announced that it is generally willing to provide even
broader usage rights for the company's protocol technology than is
required by the final judgment in the antitrust case or is reflected in
standard MCPP license agreements. Microsoft has already voluntarily
granted usage rights to a number of licensees under the MCPP that exceed
the requirements of the final judgment, and Microsoft encourages other
developers who may be interested in licensing the company's protocol
technology to discuss their technical requirements with Microsoft's
protocol licensing team.

The changes announced today are in addition to ongoing improvements the
company has made throughout the past year, including several announced
in April 2003. Those changes included eliminating an industry-standard
nondisclosure agreement, publishing all program license terms for the
program on a publicly accessible website, and providing an opportunity
for developers to evaluate the protocol technology prior to entering
into a license agreement. Through the Department of Justice and the
States and directly from prospective licensees, Microsoft received
additional feedback and has made the additional adjustments announced today.

"While we believe our original terms were commercially reasonable given
industry licensing practices and the considerable investment we made in
developing these protocols, we understand the importance of listening to
and acting on constructive feedback," says Smith. "Microsoft remains
committed to working collaboratively with the Department of Justice, the
States and others in the industry in our continuing effort to meet fully
our obligations under the final judgment."

Microsoft also announced additional steps it will take to help promote
the protocol licensing program. The company will step up its
evangelizing efforts by reaching out both to individual companies and
broadly to industry and potential interested parties to educate them on
the licensing changes and overall aspects of the program.

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in
software, services and Internet technologies for personal and business
computing. The company offers a wide range of products and services
designed to empower people through great software - any time, any place
and on any device.

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