Microsoft’s Software Licensing and Protection (SLP) Services operation, which hasn’t sought any new customers since late last year, has been spun off into a Dublin start-up called InishTech.

The new company is an idea cooked up between Microsoft IP Ventures and Enterprise Ireland, the country’s development agency, which introduced InishTech’s founders, CEO Aidan Gallagher, engineering chief John O’Sullivan and COO David Smyth, to Microsoft.

The start-up has licensed the SLP anti-piracy widgetry that Microsoft acquired when it bought Israeli-based Secured Dimensions and will run with it, taking over the customer base of 120 accounts including Microsoft’s own Windows eHome Division.

Microsoft, which intends to give the fledging a leg-up in business, retains a minority interest in the new company.

The widgetry, aimed at ISPs and developers, makes it harder to reverse-engineer .NET-based code by taking selected DLLs and functions in the DLLs and virtually compiling them into a vendor-specific format called Secure Virtual Machine Language (SVML). They still look like regular MSIL functions (in terms of interfaces) and run on top of the .NET platform (CLR) for the sake of interoperability and code optimization but they are practically unreadable.

The magic involves a secure virtual machine (SVM) engine and the fact that only parts of the code are encrypted reduces overhead. There are of course also decompilers.

The widgetry is supposed to offer software publishers greater flexibility in licensing models such as the cloud.

It is the first time the Microsoft IP Ventures program has spun out an existing Microsoft business. The move supposedly relates to the economy and deciding what’s core.