IBM, Microsoft Agree to Share Patents on Operating Systems

IBM and archrival Microsoft have set aside deep differences over their computer operating systems, agreeing to broadly share patents in an effort to avoid potential lawsuits, company executives said.

International Business Machines Corp., the world’s largest computer company, and Microsoft Corp., the best-known software publisher, have been in a heated 18-month battle over the direction of personal computer software.

Confusion over the operating systems, the base layer of software that controls a computer’s internal functions, have made software buyers and writers more cautious about software products, Lee Reiswig, executive in charge of personal systems software for Armonk, N.Y.-based IBM, said Sunday.

“People who are worried about whether we will do things tend to wait,” Reiswig said. “Now we’re on our way, and may the best product win.”

The agreements more clearly delineate how IBM and Microsoft will proceed with their operating systems.

IBM this year introduced a much-improved version of its OS-2 operating system, which it says makes IBM-type personal computers easier to use and more powerful.

Microsoft’s star product is Windows, which also makes IBM-type PCs easier to use.

Up to now, software buyers and writers weren’t sure whether IBM would continue to provide Windows compatibility for OS-2 and whether IBM would use its rights to Microsoft’s Windows NT operating system, said Reiswig.

Microsoft plans to announce the new version of Windows, called NT for New Technology, later this year. It will provide enhancements to existing Windows software.

The settlement between the companies, reached a week ago Sunday, will let IBM and Microsoft broadly share patents covering both operating systems. In addition, IBM and Microsoft will be able to use licenses to already developed and new releases of each other’s software until September, 1993.

Also under the settlement, IBM agreed not to exercise its right to Microsoft’s NT operating system.

The agreement also calls for Microsoft to make a one-time payment to IBM in the neighborhood of $10 million to $20 million. The money will cover patents IBM is sharing with Microsoft.

Both companies will also pay each other royalties for using each other’s operating systems.

Steve Ballmer, executive vice president of worldwide sales and support for Redmond, Wash.-based Microsoft, said the settlement’s main purpose is to prevent litigation.

“I consider it more of a non-event than an event,” Ballmer said. “Nothing’s going to get litigious, and we’re going to compete and cooperate where it’s going to make sense.”

IBM and Microsoft once collaborated to develop an early version of OS-2, which was designated the eventual replacement for DOS, the operating system software found on most IBM-type personal computers. Microsoft had developed DOS for IBM’s first personal computer, introduced in 1981.

But that version of OS-2, which had drawbacks and technical problems, never became a hit. Microsoft’s Windows 3.0, introduced in May 1990, became a phenomenal best-seller after earlier versions also didn’t catch on. Microsoft then decided to base all its future software development on Windows.

While IBM had sold fewer than 1 million copies of OS-2 since its 1987 introduction, Microsoft has sold almost 10 times that many of an improved version of Windows it introduced in 1990.

However, Reiswig said Sunday that IBM has sold more than 700,000 copies of its improved OS-2 since delivering its first one on March 31. That figure is higher than other industry estimates.