Microsoft is looking to bolster its online privacy portfolio with the acquisition of Credentica’s U-prove technology. Terms of the deal weren’t disclosed, but Microsoft is not only getting U-prove: it’s getting the underlying patents, and U-prove’s Stefan Brands and Credentica’s Greg Thompson and Christian Paquin will join Microsoft’s Identity and Access Group.

U-prove was developed as a technology to enable users to offer up only the minimal amount of personal information required to carry out an electronic transaction. The U-prove system also employes encryption to ensure disparate systems can’t mine transaction data for information, building aggregate profiles that potentially violate users’ privacy.

Microsoft plans to integrate U-prove into WIndows Communication Foundation and CardSpace, both of which are built on Microsoft’s .Net development framework. U-prove is of obvious interest to online merchants and ecommerce sites, by should also appeal to governments, medical applications, and identity verification services. On his Identity Corner site, Brand notes that U-prove has been approached many times in the past about a takeover, but he feels Microsoft is the right company to drive the technology forward because of its presence in both the client and server sides of the process. Stefan Brand has been developing U-prove for 15 years.