Quoting from the Microsoft official announcement:
Microsoft Corp. today announced at the Interoperability Summit in Brussels that its virtualization format technology will now be available under its Open Specification Promise (OSP), an irrevocable promise from Microsoft to every individual and organization in the world to make use of this patented technology for free, now and forever when implementing specified open standards. Microsoft first announced the availability of an OSP for Web services specifications in September 2006 and now is expanding its customer-focused commitment to interoperability by applying the OSP to Microsoft’s Virtual Hard Disk (VHD) Image Format specification.
As a common virtualization file format, VHD has been adopted by more than 60 vendors, enabling partners such as Brocade Communications Systems Inc., BMC Software Inc., Diskeeper Corp., Fujitsu Siemens Computers, Network Appliance Inc., Virtual Iron and XenSource to help provide more seamless manageability, security features, reliability and cost efficiency for customers. Customers and partners realize the value of standardizing on the Microsoft VHD format because it is the Microsoft virtualization file format and offers migration across Microsoft Virtual Server, Virtual PC, and Windows Server virtualization with Windows Server “Longhorn.” The OSP will help further broad adoption of the VHD format.
The Microsoft site dedicated to interoperability with open source technologies, Port 25, published an interview with Simon Crosby, CTO at XenSource, about the licensing change in VHD. Listen to it here.