Microsoft and Autodesk have agreed to cross license their respective patent portfolios.

The agreement covers patents in several areas, including data management, collaboration, computer-aided design (CAD), digital effects, digital rights management and project management. Terms of the agreement were not disclosed.

Patents licensed from Autodesk, a California-based CAD specialist, could be useful to Microsoft in developing Xbox video games and a user interface for Longhorn, said David Kaefer, director of business development at Microsoft.

Autodesk is eyeing several Microsoft patents, but the company won't detail specific product plans, said Scott Borduin, Autodesk's chief technology officer. "There are some very basic things that Microsoft has done in terms of graphics environments that are relevant to us. Similar things that they have done in terms of basic database, networking and interface design technologies are quite relevant to our digital design data strategies," he said.

With about 3,600 patents in the US, more than 1,000 in Europe and several thousand patents pending, Microsoft is by far a larger patent holder than Autodesk, which holds less than 200 patents in the US.

While the cross-licensing pact is the first such deal for Autodesk, Microsoft has several similar agreements in place with SAP, Cisco, Siemens, HP and IBM.

It is also pursuing further agreements as part of a strategy to obtain the rights to technologies that it might use in its products, he said. Negotiations are already under way with about a dozen companies and over the next five years Microsoft hopes to have such deals in place with between 30 and 40 companies.

"About 30 or 40 companies end up being very important for us to have cross-license agreements with," said Kaefer. "If you get agreements, at least in our industry, with the big 30 to 40, you can provide a tremendous amount of development freedom to yourself going forward. Probably about 80 percent of the relevant patents out there are really held by those 30 to 40 companies."

Microsoft's licensing spree marks a tactical change. The company is changing itself from a "trade secrets" company to one that banks on sharing its intellectual property (IP) and benefits from being seen as a more co-operative and open player, Kaefer said. About a year ago, Microsoft announced a new IP licensing policy and the formal licensing of two technologies.