Microsoft will remove a market-controlling patent clause in its licence following pressure from regulators, the software giant has confirmed.

From August this year, Microsoft will scrap a clause in its contract with PC manufacturers that prevents them from enforcing any hardware patents they have that may have implications for Microsoft's software.

The so-called non-assert clause will be removed from all licensing agreement renewals for the Windows operating system, Microsoft spokesman Tom Brookes said yesterday. "We recently reviewed this provision again, after receiving comments on it from some of our OEM customers, and have decided to delete the provision in its entirety from the next round of OEM contracts," he said.

Brookes denied however that simultaneous investigations of Microsoft by Japanese and European competition regulators led the software firm to scrap the clause. "It's coincidental," he assured.

Last October, the European Commission wrote to 22 OEMs asking them about the clause. Ten days ago, the Japan Fair Trade Commission raided Microsoft offices in Tokyo in a similar inquiry. Regulators in both countries suspect that Microsoft may be abusing the dominance of Windows.

Hardware manufacturers such as IBM, Dell, Hitachi and Toshiba have signed up to the non-assert clause because they cannot afford to offer computers without Windows, said Thomas Vinje, an outspoken critic of Microsoft and a partner in the Brussels office of law firm Clifford Chance.

The clause acts as a big disincentive for OEMs to innovate, according to Vinje, whose clients include Dell and Fujitsu. For example, if IBM patented a method for speeding up the operations of a computer, the company would not be able to enforce that patent in order to prevent Microsoft or any other competing hardware manufacturer from using the technology. "The Commission has looked at these clauses in the past but it has never issued a ruling," Vinje said.

In 2001, the Commission closed an investigation of the non-assert clause after Microsoft reached a settlement with an unnamed British OEM that sparked the investigation by complaining to the European competition regulator. "We briefly looked into the patent-related clause as a result of a complaint in 2000 by a company that had a patent-related dispute in the United States, but did not pursue the case as it was settled between the companies concerned," Commission spokeswoman Amelia Torres said.

The Commission's inquiry into Microsoft Windows licensing agreements with hardware manufacturers could still form the basis of a separate anti-trust investigation, even if the non-assert clause is scrapped later this year. The letter to the 22 OEMs also asks them about clauses in their contracts with Microsoft that the Commission suspects are designed to create obstacles to open source software.

"There are several provisions in the contracts that are designed to act as road blocks to open source software running on PCs," Vinje said. "The Commission also asked about these."

There is no timeframe for the Commission's investigation.

The inquiry is separate from an ongoing anti-trust lawsuit conducted by the Commission. That case focuses on Microsoft's policy of bundling its audio-video Media Player software into successive versions of Windows.

The European Commission has accused Microsoft of abusing the dominant position of Windows in order to foreclose the market for multimedia software. The Commission also accuses the software giant of leveraging its dominance of PC-operating system software into the market for low-end server operating systems.