Study: Windows users pay $21.50 for Microsoft patent woes

Businesses and consumers are paying an additional $21.50 “patent tax” on all Raymond operating systems to cover Microsoft’s ceaseless patent-related lawsuits and settlements, the Software Freedom Law Center (SFLC) claims.

The “patent tax”, as SFLC called it, is based on the amount of money Microsoft has spent as legal fees and on settling patent infringement claims involving Windows and Office over the last three years, divided by the estimated number of Windows installations.

In the last three years, SFLC estimates Microsoft has publicly paid more than $4bn to plaintiffs who claim Windows and Office products infringe on their patents. The high-profile legal settlements Microsoft paid include the $1.5bn to Alcatel-Lucent, $1.25bn to Sun, $536m to Novell and $440m to Intertrust, a total of $4.3bn.

Base on Microsoft estimates that suggest an installation rate of 200 million machines per year, the group arrives to $21.50 per copy of OS as patent tax.

The real figure could be higher as there are a number of undisclosed settlements during the three years. However, the figure could equally be an over-estimate, given the money Microsoft paid to Novel and a significant proportion of the money the company paid Sun covered antitrust rather than patent infringement claims.

A report from the SFLC said: “While $21.50 might not sound like a lot, it adds up pretty quickly. A school with only 50 Windows machines - barely enough for one class of students - is paying $1,000 of its limited budget in patent tax, rather than buying books or other useful supplies. A government agency with a mere couple of hundred Windows machines is paying many thousands of taxpayer dollars in patent tax.”

The simplistic approach made by SFLC to calculating such a large corporation’s legal expenses affecting product pricing is bound to draw some criticism. But SFLC researcher Matt Norwood said, the $21.50 figure probably isn’t a literal price increase from having to handle law disputes. However, he said it’s important to recognize legal costs from patent disputes are being passed from developer unto the user.

The SFLC said: “Customers in Europe and North America pay more for Windows licenses than in less affluent countries, leaving them with a bigger slice of the patent tax pie. And many Windows installations are unlicensed, meaning that those users’ share of the patent tax gets passed on to paying customers.”

In comparison, the SFLC said, Linux has no “patent tax” at all, and suggests that this finding be taken into consideration when choosing operating systems.