Microsoft Indemnifies Most of Its Users

Computerworld - Microsoft Corp. last week expanded its indemnification program to cover most of its customers, in a bid to further set itself apart from open-source rivals. The move, some experts said, is a great marketing tool but will have little impact on users.
Vendor indemnification programs have emerged as part of IT risk-mitigation strategies and have become particularly important for Linux sites because The SCO Group Inc. has threatened copyright infringement lawsuits.
"When we evaluate companies and software products, indemnification is one of the first things we look at," said Ken Meszaros, assistant vice president and infrastructure manager at LandAmerica Financial Group Inc., a Richmond, Va.-based real estate transaction services provider. "It is important that the vendor is willing to stand up for the integrity of its products."
For several years, Microsoft has indemnified its volume license customers from possible legal threats.
Last year, the vendor lifted the monetary cap on that protection. Microsoft is now extending protection to virtually all users of its products.
David Kaefer, director of business development at Microsoft, said that after a review, the company "came to the conclusion that there really is no reason why we would not offer it to anybody."
While having a form of free insurance is always nice, the Microsoft move appears to be mostly marketing, said David Elkins, a partner in the intellectual property practice at Squire, Sanders & Dempsey LLP in Palo Alto, Calif. The largest corporations that most need protection are already covered, he said.
"Microsoft is using its financial power to enhance its marketing advantage in this particular area," Elkins said. Smaller Linux vendors can't match Microsoft's blanket indemnification because they don't have the financial means, he noted.
"Indemnification is one element in overall platform value, just like total cost of ownership, security or reliability," Kaefer said. "Linux vendors offer much narrower indemnification."
Al Gillen, an analyst at IDC, said that the program won't mean much to users. "The chances are that if a customer was sued over intellectual property violations by Microsoft software, there is a pretty good chance that Microsoft would have to step into the fray anyway," he said.
Evers is a reporter for the IDG News Service.