updated 01:05 pm EDT, Sun March 27, 2011
Microsoft gets bills that hit supplier piracy
Microsoft has stirred controversy in the past week by passing a bill (PDF) in its main state of Washington, as well as proposals in Oregon (PDF), New York, and several other states, that could make firms liable for pirated software use by their suppliers. The move would let Microsoft or anyone else sue a US company if one of its contractors uses pirated content to make, market, or ship a product. In Washington, Microsoft could seek triple damages or a ban on a company's products if the case went to trial.
The law has drawn controversy since it could have repercussions both for US laws but also for fair competition. At a minimum, Microsoft's enacted and proposed measures may conflict directly with federal-level copyright laws. Companies may also be prone to lawsuits even despite their best efforts, since they may be unable to monitor the software use in factories and offices in China or other countries where piracy is common. Dell, GM, HP, IBM, and Walmart all objected to the Washington bill but were largely ignored.
It's suspected that Microsoft also had the law shaped primarily to hurt device makers who back away from either Windows or Windows Phone in favor of Android, Chrome OS, or another Linux-related OS. Having the power to sue because of contractors could let Microsoft punish a company for using an alternative by using pirated Windows or Office installs at a contractor as a pretext.
The Washington and Oregon bills conveniently exclude open-source licenses, where users can freely modify the software, from having similar claims. As such, neither Google nor Linux distribution providers like Red Hat could make claims for damages in the same situation, putting all the power in Microsoft's hands. Hardware manufacturers using Android or Linux would also be locked out.
Ever since Linux became a significant competitive threat in servers, Microsoft has tried to argue it has inherent ownership of technology in Linux-related platforms and has tried to extract royalty deals to either discourage use or profit even as competitors move away; most of these have focused on patents. It's known to have used SCO's Unix ownership lawsuits as proxies to close down competition and has used a patent licensing deal with Novell as a way of pushing other companies into making cross-licensing patent agreements, such as Amazon's Kindle licensing. To date, the patent assertions have faced few significant challenges, although Motorola has fought back. [via Groklaw]