Microsoft Defends Royalties It Charges Code Licensees

Microsoft said Thursday it considers the royalties it charges rivals for licensing communications code fair after a newspaper report said European Union regulators want the company to hand over the information at little to no cost.

Microsoft spokesman Tom Brookes said the software giant did not receive clear guidance from the EU's Commission on what fair pricing would be.

"It's hard to stick to the speed limit when no one will tell you what it is," he said.

The Financial Times cited a confidential document the Commission sent to Microsoft on March 1 and said the EU was asking the company to set little or no license fee for information it must share with rivals as part of a March 2004 antitrust order. The software information must allow competitors to produce server software that works smoothly with Windows.

The newspaper quoted a statement from Neil Barrett, the computer science professor monitoring Microsoft's compliance, arguing that even a 1% royalty rate would be unacceptable to licensees and no fee would be better.

When contacted, the Commission said it had no comment on the report.

Microsoft's license program sets a maximum 5.95% royalty rate for products that use its server protocols. The company said it believes the prices it has set are fair to reflect the code's "considerable innovations."

"The Commission is asking us to license the technology to our competitors for free," said Microsoft spokesman Jack Evans from Seattle.

The EU executive disagreed on March 1 when it said there was "no significant innovation" in the requested information Microsoft had to provide rivals -- and therefore Microsoft did not have the right to charge high fees for licenses.

It gave the company until April 23 to respond to the charges, threatening to start levying daily fines of 3 million euros ($4 million) a day after that. Microsoft can ask for a hearing to plea its case before the EU decides to set fines.