The company, employing the technology originally developed in Xerox' Palo Alto Research Center (PARC) a decade ago, will deliver software solutions to protect the intellectual property rights and protect artistic freedom from copyright violations over the Internet. At the same time, it will also make B2B document transfer over the Internet more secure. It will be embedded by Microsoft in all its software offerings ranging from SQL2000 servers to MS Windows versions.

Presiding over the high-profile announcement along with Microsoft president and CEO Steve Ballmer, Xerox president and CEO Rick Thoman described the launch as one marking a new beginning for Stanford-based Xerox. ``There is no easy way to ensure the protection of your copyright over the Net. That is why the best books and best music is never available online. We hope we can bring about a major change in the fortune of e-books. Now, you can decide who can download or take a print of your work,'' said Thoman.

``It will become increasingly important not only to the content producers, but anybody sharing anything over the Net to secure it. We may be a minority investor, but will be majority customer for ContentGuard,'' said Ballmer. The company will offer royalty-free licencing of its eXtensible rights Markup Language (XrML).

As the Net becomes a delivery medium for high-value content, an open, extensible language for expressing rights and permissions will become crucial in creating interoperability across the industry. XrML is a specification for the association of rights such as access fees and usage conditions with content. By licensing XrML on a royalty-basis, ContentGuard is striving to promote this seamless interoperability of digital rights specifications of writers, publishers, distributors and retailers.

Both Xerox and Microsoft will collaborate on future development of digital rights management technology and standards, including the establishment of XrML as a common standard for all forms of digital infotainment. Assessing digital content with ContentGuard will work much like the pay-per-view TV, with the owners being able to specify their own terms and conditions for customer/viewer access to the material owned by them. The company will incorporate these specifications into the digital content and use highest encryption technology to `lock it'. When the user will attempt to access a ContentGuard-enabled document, he will be routed to a rights management Website where he will have to obtain a digitally-signed licence to unlock the content.

The company will derive revenues through striking partnership agreements on a per transaction revenue-sharing basis, through software licencing and services, according to Thoman.

ContentGuard has already enlisted support from 18 companies including Hewlett-Packard, Adobe, Barnes and Noble, Time Warner Trade Publishing and Thomson Publishing. ``We believe that rights management will become a ubiquitous element of all content exchange, whether for e-commerce or for ensuring the persistent protection of high-value sensitive information,'' said ContentGuard's newly-appointed president and COO Ranjit Singh.

Thoman, who has been making efforts to steer the company into a digital products market leader with limited success so far, seems to have bet a lot on the future of this venture. There are indications that ContentGuard will receive private investment from at least two other technology companies, with the first of those likely to be announced within two months.

Plan is also afoot to take the company public as soon as it strikes out on its own in the big, wild Net world. After all, it has the nimbleness of a start-up unlike the parent, senior Xerox officials believe. There is also a possibility that Xerox may have finally stumbled upon the path of spinning off some of technologies developed by the highly-acclaimed PARC into profitable subsidiaries. The company globally spends about $1.8 billion on research and development per annum.

A buoyant Thoman expressed the hope that ContentGuard will be able to notch up a respectable base soon after the integration and launch of its solutions by MS over next couple of months. ``It will give significant returns to our investments. This a big idea which is bigger than both of us,'' he chirped, even as Thoman promised that a beleaugered Microsoft will ``work very hard to support and popularise ContentGuard.''

Digital rights management is an industry in the infancy stage. Yet, to carve a niche in this area, ContentGuard will have to contend with competition from IBM and Adobe in this space. Quoting IDC figures, Thoman said the market was set to explode with the pie growing to $300 billion by 2003.