Joff Wild

You can always rely on Marshall Phelps, Corporate VP for IP policy and strategy at Microsoft, to give good value at events where he is speaking. And today proved to be no exception. In a session at the LES USA and Canada meeting in which Phelps was one of the panellists, he told delegates that within two years Microsoft would have a portfolio of around 50,000 patents – 25,000 in the United States and 25,000 in the rest of the world.

The company’s filing strategy is based on two key points, he explained. The first is that it needs protection in what it believes to be its key markets: the US, Europe, Japan and the BRICs (Brazil, Russia, India and China) countries, among others. The second is that it has to have a presence in countries that have a software manufacturing capability; that means the same countries as above, but also others such as Taiwan. Europe, Phelps said, likes to think that it is different because it says it does not grant software patents “but they can’t distinguish between hardware and software so the patents get issued anyway”.

Staying in Europe, Phelps said that the European Commission now sees itself as the world’s antitrust enforcer and so the nexus of the competition/IP interface is now very firmly to be found in Brussels. Microsoft, of course, had a drawn out dispute with the EC’s competition authority that only recently came to an end.

Phelps also admitted that pricing was an issue for all IP-owning companies. If they priced their products too high in markets which could not afford to pay, then owners would either invite counterfeiting and piracy or compulsory licensing at the government level. For that reason, Microsoft cannot charge people in countries such as Thailand the same price for Windows that it asks Americans to pay. “You have to be careful with your business model,” he said, “or you may cause problems to perpetuate.”

Finally, Phelps addressed the potential IP policy consequences of a global economic downturn. He cautioned that flat-lining economies may put pressure on governments to backtrack on IP protection. It has happened before and rights owners need to make sure that they are vigilant it does not happen this time around. But if it does, Phelps cautioned, governments themselves are likely to end up the losers. Companies will pull out of those countries where enforcement is relaxed or the rules are changed.