The Fortune piece describes Microsoft as "a mature company facing unfavorable market trends and fearsome competitors like Google." Feeling a bit beleaguered, perhaps the software giant believes it needs to get its hands on as much money as possible - and surely it deserves payment in the form of royalties for patented software, right? Indeed, Microsoft has already approached a number of large companies that use open source software and entered into direct patent license agreements with them. As the Fortune article explained, the special licenses governing open source software forbid the distributors of such software from paying royalties, but not the users.

One would think Microsoft would be happy with that much. Then again, is it about the money, or the principle? And if it is about the principle, who is in the right here?

Microsoft's Steve Ballmer tries to make it sound like it's about the principle. "We live in a world where we honor, and support the honoring of, intellectual property," he insists, saying that those who use open source software must "play by the same rules as the rest of the business. What's fair is fair."

That's as may be, but those rules look like they're about to change. At the end of April, the U.S. Supreme Court handed down a decision in KSR vs. Teleflex that "will make it harder to get new patents and to defend existing ones," according to Peter Lattman, posting on the Wall Street Journal Law Blog. In order to be patentable, an invention must be new, useful and unobvious. This ruling considers the issue of obviousness in a way that seems to apply particularly well to software patents.

The ruling is very subtle in that it addresses patents that are obtained on new products that combine elements of pre-existing inventions. The Supreme Court stated in a unanimous opinion that a combination derived from only "ordinary innovation" that "does no more than yield predictable results" is not entitled to patent protection. Justice Anthony M. Kennedy noted in the opinion that "Were it otherwise, patents might stifle, rather than promote, the progress of useful arts." You can check out the full 31-page PDF of the decision if you wish.

This decision has been hailed by a number of legal observers as injecting some common sense into patent law. And it's easy to see how this might affect software patents when you realize that the creation of new software often involves combining a number of pre-existing elements to yield a predictable result. Morgan Reed, executive director of the Association for Competitive Technology, noted that "The KSR decision...will make it much harder to obtain and enforce the kind of absurd software patents that are threatening the future of the patent system."

I am not a lawyer, but as far as I know, patents don't get "grandfathered." If Microsoft tries to assert its patents in court in an attempt to get royalties, those patents can be challenged (in all honesty, patents can always be challenged). But they won't be challenged only under the law and precedents that were considered good when the patent was granted. KSR vs. Teleflex can now be cited as a precedent - and don't think for a minute that a sharp lawyer is going to ignore it. Microsoft should be concerned, to say the least.