updated 7/19/2006 8:17:59 AM ET 2006-07-19T12:17:59

Microsoft Corp. plans to license a technology for manipulating three-dimensional images as part of the company's efforts to make more money from its in-house research and development.

The "TouchLight" technology being licensed to EON Reality Inc. is designed to let users physically move images around using their hands.

The technology was developed at Microsoft Research, the arm of the software maker devoted to cultivating sometimes far-flung ideas that may never make it into a Microsoft product.

The deal lets EON refine the technology and sell it.  The Irvine, Calif.-based company said it planned to incorporate TouchLight into existing interactive display products.

For example, a car or airplane maker could use the technology to demonstrate a new product or to provide detailed views of different components.

David Harnett, senior director of Microsoft IP Ventures, said the license is perpetual as long as certain milestones are met. Specific financial terms were not disclosed.

The deal allows Microsoft to also license the technology to others or use it in-house for other products.

Harnett said Microsoft has completed between 10 and 15 similar licensing pacts since launching a division devoted to such deals in May 2005

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