As an ardent Microsoft supporter and software engineer, this sounds like bad news. To me, if this all true, is negates the very principle behind what I value so much, .NET. It seems this mentality is antithetical to their otherwise (semi)open approach. I understand the feelings behind intellectual property on things like file formats, protocols, etc., but inevitably tools will be built that interface with these formats or protocols. Indeed, as many have said, many of their protocol definitions are simply abstracted from otherwise open protocols. Is it right for them to claim ownership?
So, MS designs a framework (.NET) that has an extremely open and extensible means of data representation (XML) for almost every facet of the framework, yet injects the notion of intellectual property into the arms of open-source developers?
Bah. Seems like many of the "powers that be" within MS aren't communicating...