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Bradford L. Smith is senior vice president, general counsel and corporate secretary for the Microsoft Corp. He heads the Redmond, Wash.-based company’s Department of Law and Corporate Affairs, handling legal and public policy issues in such high-profile areas as intellectual property, competition law, and the Internet. In 2002, he led negotiations that resulted in nine state attorneys general dropping their antitrust appeal against the company. He has also been involved in Microsoft’s fight against illegal spamming, virus creation, and software counterfeiting. Smith recently talked to Legal Times. Legal Times: Tell us a bit about the law department at the Microsoft Corp. How large is it? Are you all at headquarters? Brad Smith: We have over 800 people in the law department — 330 lawyers in 38 different locations around the world. There are 600 people in the United States, and the rest are based outside the U.S. We have a number of deputy general counsel. Some of them are aligned with different groups in the company, while others are more specialty-focused on areas such as intellectual property, litigation, antitrust, legal compliance, and corporate affairs. LT: Whom do you report to? Do you have frequent contact with Bill Gates? BS: I report to CEO Steve Ballmer, and on a day-to-day basis I act as a lawyer for the corporation. I work most closely with Steve and with Chairman Bill Gates. With Bill, I discuss patent- and product-related design, and with Steve I discuss other things. LT: What are Microsoft’s biggest legal concerns? We have a few different buckets. IP, of course, is a substantial one. We are one of the largest investors in the country in research and development. Also, antitrust and competition law are a substantial area of focus. We have a number of other information-technology-related issues, including computer security, hacking, spam, and privacy-related issues — those kinds of IP-related issues. Another bucket is that we are a publicly traded company, and so we have Securities and Exchange Commission and governance issues. We’ve spent a lot of energy and attention in the last couple of years to make sure we have good corporate governance. LT: What are your priorities? BS: If I were to identify the top couple of priorities since taking this job three years ago, I would say: to improve our relationship with government, and to improve our relationship with the rest of the industry. We’ve managed to negotiate a number of settlements, especially here in the United States, and we’ve managed to resolve disagreements with other companies. We’ve made good — if not always fast — progress. I do think it creates a foundation for us to be more connected [with other companies] on the big issues that will shape the future of information technology. This also relates to digital inclusion, making computers accessible to everyone. We have the opportunity to make computing more accessible to people throughout the world and to make computer training more accessible. What we need to do today to work our way to 2020 is to make computers as accessible as TVs are today. If there was one thing that attracted me to Microsoft from the get-go, it was the company’s commitment to a long-term vision. Unlike 10 years ago, we see that a clear future is closely connected with government policy and the NGO community. Our focus is the recognition that it’s incredibly important for us to work well with government: Washington, the states, and around the world. Washington and Brussels are the places where issues tend to be debated first. Some day that will change, but that’s still the case today. LT: How much do you travel? BS: I go to D.C. and Brussels frequently; Asia two times a year; Latin America four times a year; and New York six times a year. LT: In patents, what do you see as the most important issues? BS: Obviously, we are concerned about the whole issue of the way the whole patent system works in the United States, and around the world, especially in Europe, where there is a directive on computer-implemented inventions. [The European Commission is seeking to clarify and make consistent patent laws for software throughout the European Union, but the directive has set off a complicated round of battles over patents.] We need to get a patent system that works well. We also need to make sure we are putting in place strong IP protections. LT: Is Microsoft stepping up the number of its patent filings this year? Why? Has Microsoft been changing the way in which it handles its portfolio? BS: We’ll have 3,000 patent applications per year, which is a tripling from where we were three years ago. The truth is that we were not investing in protecting our innovations. Now we’ve caught up, as you will, with industry norms. We spend about $7 billion a year in research. We’ve been doing a good job in helping patents to move out into the industry, and we’ve really changed our approach in the last 16 to 18 months. Why? I think it was a recognition that as a large company with a substantial amount of innovation, it’s important to work with the rest of industry. LT: How many patent cases does Microsoft have going now, both as defendant and plaintiff? BS: We don’t have any in which we are the plaintiff. We do have 37 pending against us as the defendant. That’s mainly because of our company size and the popularity of our product. We spend close to $100 million a year [on litigation]. I do feel good about the record we have in terms of winning cases. Recently, we had two or three go to a jury verdict; and we had some reach appellate court. We tend to win 90 percent of our cases. The problem is that the last 10 percent is very expensive. LT: What’s your history with the company? Where were you before Microsoft, and what areas have you covered at Microsoft? BS: After clerking in New York, I moved to Washington. I worked for Covington and Burling in Washington and then moved to its London office in 1989. After becoming a partner at Covington, I moved to Microsoft in 1993. I had worked as an outside lawyer for Microsoft. That was my area of legal practice. First, I worked for Microsoft in Paris to head up the company’s European legal and corporate affairs work. LT: Did that give you a better perspective on Europe? BS: The longer you are away, the less connected you are. Having spent seven years working in Europe, I do have some perspective. In Paris, I probably went to Brussels on average every other week. Since I spent a lot of time in Brussels, I do appreciate a sense of how the place works. That doesn’t always translate into success, but I do believe that patience ultimately pays off. You do need to stick with it. After Paris, I moved here [to Microsoft headquarters in Redmond, Wash.] in 1996. For five years, I had the job of managing all of the legal and corporate work outside the United States. After that, I become general counsel in 2001. It has been lots of fun. LT: In terms of outside firms, I read recently that you were cutting back, or renegotiating billing structures with some firms. Is that mainly for litigation? BS: I don’t know if I would call it “cutting back.” We have instituted a preferred provider program. It’s an opportunity to develop a deeper set of relations with a smaller number of firms. We have two objectives: to improve quality and efficiency, and to develop a deeper partnership with law firms in the program with us. We hope we’re getting better representation. And at the same time, they’re getting better value from us. LT: Do you have a computer or programming background? How do you use your computer? BS: I was definitely drawn to Microsoft because of a great interest I have in software and in personal computers. When I arrived at Covington, the firm was using IBM Display Write software on PCs. But I really liked Microsoft Word. I decided that I just couldn’t take the program any more, so I brought in a [legitimate] copy of Word. For the first few months, it generally worked fine. But on the Wednesday before Thanksgiving, we drove up to New York to my wife’s family, and a partner needed to use my computer to write a brief. It wasn’t appreciated. I definitely have that software background, so much so that another partner at Covington said I should take the opportunity to learn about a software directive being introduced. That’s how I ended up working for the Business Software Alliance. In terms of software, there’s less variation in the world today than years ago. I do use a Tablet PC. When I was at the hearing in Luxemburg, [Last fall, Microsoft asked the European Court of First Instance, its high court, for a stay of the remedies on patent limitations that the European Commission had ordered. The court turned down Microsoft's request.] I was taking notes. Of course I also rely on e-mail. I also use Windows Instant Message. Also, I have to say that Microsoft’s new desktop search technology saves me hours a week. Now I can find whatever I’m working on. LT: When you’re not in the office, where might we find you? BS: I have a 12-year-old and a 10-year-old. My wife is a lawyer as well [she was with Gibson, Dunn & Crutcher in Washington]. She’s now GC for a biomedical company here. I try to focus my free time on them. In summer, we get out on our boat. People are attracted to this area like they are attracted to the Chesapeake Bay. In the winter, we try to go skiing. My 12-year-old can surpass me at Xbox, and my daughter is one of the most impressive PowerPoint users I’ve ever met. LT: Read any good books lately? BS: I just finished the memoirs of Ulysses S. Grant, even though they are 120 years old [first published in 1885]. They are still considered the best memoirs ever written by a former president. Grant had cancer, and he also had been in a career in the military and in the White House [so he didn't have much money]. He realized he was going to die, so he did something to earn income for a means of supporting his wife. He finished the book and, within two weeks, he died. The book is regarded as quite candid. LT: Finally, what is Bill Gates really like? BS: He combines a blazingly fast and creative mind with a strong sense of humor.

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