Microsoft is extending the policy that currently protects some of its business customers from potential legal costs associated with intellectual-property disputes to all of its customers, including consumers.

The company will disclose on Wednesday that its intellectual-property protection now covers most of its products and virtually all of its customers. The only products not covered are Microsoft's embedded software products, which include Windows CE and Windows XP Embedded.

It's part of a broadening strategy by Microsoft to offer indemnification that goes beyond what's available from Linux distributors and resellers, including IBM, Novell, and Red Hat. Microsoft says it will shield customers from legal costs or damage claims related to intellectual-property disputes involving patents, copyrights, trade secrets, or trademarks.

"We're hopeful it will be a differentiator," says David Kaefer, Microsoft's director of business development for IP and licensing. Microsoft's indemnification coverage will become automatically available to all licensed customers.

Until now, Microsoft has offered indemnification only to businesses that sign volume licenses for its products, and only on products available via volume licenses. Microsoft's new policy will now cover small business that haven't signed volume license agreements and consumers. "If my mother purchases a product from Microsoft, she's covered," says Kaefer.

By Microsoft's own estimate, midsize and large companies are more likely to be the target of any potential intellectual-property disputes. The issue of indemnification has received increased attention in the wake of several high-profile software disputes, including the SCO Group's ongoing legal pursuit of companies that use the Linux operating system, which it claims includes misappropriated Unix code that belongs to SCO.