Microsoft introduces FAT file system royalty fee charges for each hardware product that uses FAT

December 5, 2003

FAT is the most widely used file system in a wide range of products that store data including hard drives, flash memory, USB Pen drives, MP3 players, Digital cameras and so on. While we may take FAT for granted, Microsoft has announced its FAT patent's and licensing costs for using FAT in products such as removable storage and consumer electronics. The Microsoft FAT file system licensing is there to ensure that products that use FAT are fully compliant with Microsoft's FAT specifications and to improve consumer experience.

Licensing costs for both consumer electronics and removable solid state media are US$ 0.25 per unit with a cap of $ 250,000 on the total royalties per manufacturer. As most optical disc file systems use UDF and CDFS instead of FAT these are likely unaffected by Microsoft's new licensing.

Microsoft offers a commercially reasonable, nonexclusive license so that other companies can use the FAT file system in their own products. Currently, Microsoft offers two specific types of licenses:

A license for removable solid state media manufacturers to preformat the media, such as compact flash memory cards, to the Microsoft FAT file system format, and to preload data onto such preformatted media using the Microsoft FAT file system format. Pricing for this license is US{CONTENT}.25 per unit with a cap on total royalties of $ 250,000 per manufacturer.
A license for manufacturers of certain consumer electronics devices. Pricing for this license is US{CONTENT}.25 per unit for each of the following types of devices that use removable solid state media to store data: portable digital still cameras; portable digital video cameras; portable digital still/video cameras; portable digital audio players; portable digital video players; portable digital audio/video players; multifunction printers; electronic photo frames; electronic musical instruments; and standard televisions. Pricing for this license is US{CONTENT}.25 per unit with a cap on total royalties of $ 250,000 per licensee. Pricing for other device types can be negotiated with Microsoft.

Microsoft's FAT file system license offers limited rights to issued and pending Microsoft patents on FAT file system technology, as well as rights to implement the Microsoft FAT file system specification. In order to ensure interoperability between the licensed media and devices and MicrosoftÂ® WindowsÂ®-based personal computers and to improve consumer experience, the license requires that licensees' FAT file system implementations in the licensed media and devices be fully compliant with certain required portions of the Microsoft FAT file system specification. To help licensees implement the FAT file system, Microsoft will also provide certain reference source code and test specifications as part of the licensing package in both licenses.

In some cases, companies may wish to negotiate broader or narrower rights than the standard Microsoft license for FAT file systems. In this case, pricing may vary. Microsoft remains flexible to adjust terms to reflect crosslicensing, unit volume, version limitation, geographic scope, and other considerations.

Microsoft seem to be following Fraunhofer MP3's licensing scheme by charging royalties on any manufacturer for each unit that uses its FAT file system. While the royalty charges may look small, they may have a major impact on the retail price similar to how the MP3 royalty charge adds a considerable overhead to the retail price of MP3 players. It could even mean the end of cheap preformatted flash media and a price hike in portable digital audio players and other removable storage. It may even encourage the development and usage of other file systems free of royalty charges.

So far, software product and operating systems do not appear to require FAT licensing. If this changes, it could mean the end of having a file system that is natively compatible with both Windows and free operating systems such as Linux.

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Source: Microsoft Intellectual Property