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Microsoft, patent litigation, and its $100 million a year expenditure

As reported in the Economist (Vol. 377, Oct. 22, 2005 at 12), “Microsoft is among the companies most frequently sued for patent infringement: it is currently involved in 32 patent disputes, and spends close to $100m a year in legal costs.” (See my post of Nov. 3, 2005 where Microsoft has stated it saves 2-3% a year on legal costs because of e-billing.) The article did not say whether the $100 million was solely for litigation, or included other patent costs, but that seems the inference to be drawn.

This annual tribute will rise if the company carries out its plan to increase its patent filings each year by 50 percent, from 2,000 to 3,000 (See my post of Aug. 3, 2005 citing Brad Smith, the General Counsel.). For more on patent litigation expenses, see my posts in 2005 of March 29 (average of $2m per lawsuit), May 1 (costs of patent litigation, May 4 (Massachusetts data), May 4 (event studies of share price), and Aug. 24 (patentees winning more.)