Microsoft has angered PC makers with new licensing provisions which it says it can impose under the still to be ratified settlement with the US Department of Justice and the nine opposing states.

The new provisions force the PC makers to hand over control of their patented technologies to Microsoft, which the software company says will help it better develop the Windows operating system.

But what worries the manufacturers is that Microsoft, which is already in the hardware business with its Xbox games console and its plans to enter the storage business, will use the technologies to compete against computer vendors.

The PC makers have long fought against sharing their patents with Microsoft but were told by the software giant in December that that the settlement required them to sign away their right to sue the company for patent infringement as a condition of licensing Windows.

News of Microsoft's new hardball tactics were revealed this week in court papers which detail the under-oath questioning of Richard Fade, vice president of relations with the PC dealers.

Fade's testimony is being used by the nine states that have still to settle to convince the judge that the on-the-table penalties are inadequate.

News agency Bloomberg detailed Fade's questioning. "If in fact Microsoft has benefited from the settlement, then the settlement can best be described as untoward and wrong," suggested Howard Gutman, a lawyer for the states.

"If, in fact, you can substantiate that fact, then I would generally go along with that," answered Fade, adding that almost all of the top 20 computer manufacturers voiced anger at the new licensing provisions mandated in the proposed settlement.

"They had a net loss with regard to Microsoft. Correct?" asked Gutman.

"In their eyes I believe they think they have," said Fade.

"You made them all angry. Correct?" Gutman inquired.

"Well yes. They're all unhappy they've lost their prior language," answered Fade. The new contract language is "stronger and more far reaching than those customers had", he added.

US District Judge Colleen Kollar-Kotelly is scheduled to hold hearings next month on the Department of Justice-sponsored settlement and the views of the opposing states.