Microsoft is letting the firms it partners with keep the rights to their tech

  • The move is expected to reduce concerns of tech giants like Microsoft using knowledge of their customers' market to compete with them.
  • Microsoft previously allowed partners it created technology with to commercialize it through licensing agreements.
Microsoft President and Chief Legal Officer Brad Smith speaks during the annual Microsoft shareholders meeting in Bellevue, Washington on November 29, 2017.
JASON REDMOND | AFP | Getty Images
Microsoft President and Chief Legal Officer Brad Smith speaks during the annual Microsoft shareholders meeting in Bellevue, Washington on November 29, 2017.

Microsoft is letting firms it works with on joint ventures keep patent and design rights for the technology it collaborates on.

The move, part of the firm's new initiative on intellectual property (IP), is expected to reduce concerns of tech giants like Microsoft using knowledge of their customers' market to compete with them.

An increasing number of companies are collaborating with big tech firms on new technologies like artificial intelligence, cloud and blockchain. IBM for instance is working with several food companies, including Nestle, Unilever and Walmart, on a blockchain project to trace contamination in the food supply.

"As collaboration like this between tech companies and their customers increases, so will the questions regarding who owns the patents and resulting intellectual property," Brad Smith, Microsoft's president, said in a blog post Thursday.

"There is growing concern that without an approach that ensures customers' own key patents to their new solutions, tech companies will use the knowledge to enter their customers' market and compete against them — perhaps even using the IP that customers helped create."

Rights confusion

In most cases, tech companies hold onto rights to technologies created from joint ventures and provide customers a license to use them.

Microsoft previously allowed partners it created technology with to commercialize it through licensing agreements. The problem is that confusion can sometimes arise over which company owns the rights to that tech. This could result in litigation if either party feels there has been a copyright violation.

The Microsoft logo is illuminated on a wall during a Microsoft launch event to introduce the new Microsoft Surface laptop
Drew Angerer | Getty
The Microsoft logo is illuminated on a wall during a Microsoft launch event to introduce the new Microsoft Surface laptop

The tech industry has been blighted by legal disputes over patents and copyrights. Microsoft's new policy on sharing IPs gives partner firms more clarity on patent and design rights ownership.

Mark Hung, research vice president at Gartner, said the change in policy was a positive thing as more non-tech companies work with larger tech firms on the creation of their own technology.

"Microsoft has taken a proactive approach to address possible IP issues with the collaborative nature of many of these projects," Hung told CNBC in an email. "This is a good first step to allow these innovations to continue to blossom."

Microsoft said a South Korean hospital co-created a motion tracking artificial intelligence-powered application that uses sensors to collect data of more than 2 billion movements of a surgeon's hands during operations. The company then gave the hospital the patent rights to this technology.

Microsoft said it will cooperate with business customers in the filing of patent applications for new inventions. Customers will retain patent rights on the condition that Microsoft is granted a license to the technology.