Novell and Microsoft under the Microscope

Posted on: December 13, 2006 - 14:25 By: Feynmanfan

Many people have been asking the NZOSS for an analysis of the deal Novell did with Microsoft. It is perhaps tempting to dismiss the deal based on Microsofts history of illegal monopolistic behaviour such as its deals that excluded DR DOS from the market, or its bundling of Internet Explorer with Windows to undermine Netscape, or its bundling of Windows Media Players to undermine Real.

However, perhaps we should give Microsoft the benefit of the doubt, and consider for a moment the possibility that they are genuine about wanting to accept Linux in the IT ecology.

The first aspect of the deal was Microsoft getting a certain number of coupons that customers could use to get Novell's Linux product; Suse. This was certainly a positive aspect of the deal. This means that Microsoft accepts Linux as a player in the IT industry. Everyone knows Linux is a serious player of course, but for Microsoft to affirm it by supporting Novell in this way was significant regardless of any ulterior motive.

Brett Roberts of Microsoft New Zealand, when asked what benefits he believed the deal would bring to Microsoft replied "The primary benefit is that that improved interoperability will provide increased business opportunities. In addition, the agreement recognises Microsoft’s intellectual property and our right as a commercial software company to benefit financially from our innovations."

In order to examine this in more detail I asked Roberts about Microsoft support of the Open Document Format rather than its own format, OpenXML. He replied that "Our bet is 100% on OpenXML however we have been working with the community to make translators available because some customers want this functionality. Brian Jones’ blog is well worth reading to better understand the fundamental differences between ODF and OpenXML and the translation work that’s currently underway."

The NZOSS already knows how committed Microsoft is to interoperability, as we have opposed Microsoft patents that would cover using XML in word processing documents. It was only after the NZOSS opposed that patent that it was revised and restricted. Roberts response was consistant with Microsofts continued commitment in maintaining control over file formats, not interoperability.

Steve Ballmer took the reference to intellectual property one step further, saying "every Linux customer basically has an undisclosed balance-sheet liability". Furthermore he said that "only a customer who has Suse Linux actually has paid properly for the use of intellectual property from Microsoft".

Novell's CEO disagreed with this statement, saying "our agreement with Microsoft is in no way an acknowledgment that Linux infringes upon any Microsoft intellectual property. When we entered the patent cooperation agreement with Microsoft, Novell did not agree or admit that Linux or any other Novell offering violates Microsoft patents."

Since it seemed that Microsoft was claiming that Linux infringed Microsofts patents I asked Roberts to state explicitly which patents are being infringed? His answer was that "the beauty of the agreement is that the parties don’t have to spend years in court identifying specific infringements and arguing back and forth. By building an intellectual property 'bridge' between the two companies and indemnifying each other’s customers we can avoid legal complexities and delays and focus instead on what’s really important: customers’ peace of mind. This is an innovative approach and feedback from customers so far has been overwhelmingly positive."

If this were a patent agreement between Novell and Microsoft covering Novells intellectual property this could have been quite valid. In 1997 Apple and Microsoft entered a similar agreement in order to end a long litigation around patents which also involved Microsoft investing millions of dollars in Apple. Cross license agreements are in fact quite common, so what is the problem here?

However, Novell already indemnified their customers, so the question is raised about what additional protection the deal could provide. Mr Roberts replied "As you can see Novell’s indemnification program is a fairly light offering. This agreement means that customers don’t have to rely on Novell’s indemnification program or be bound by any of its requirements in order to be confident that they’re indemnified."

To some extent Roberts is correct, in that Novell indemnification only relates to copyright infringement. Since the claims of SCO have been discredited the confidence that Linux contains no serious copyright infringement has been established. Thus Novell is quite safe from copyright infringement claims due to Linux.

Two years ago the Open Source Risk Management group, headed by Free Software Attorney Dan Ravicher, released a report claiming Linux infringed 283 patents. Roberts points out that "the public wasn't provided any information about the patents and while the number might be disputed by some I think it's a safe bet that it's greater than zero. Bruce Perens, one of the OSRM report backers IIRC, notes in a recent petition there are so many software patents, and so many patent holders, that it would be difficult for any company, including Microsoft, to bring full featured products to market today without utilizing patented innovations owned by others. That's why Microsoft enters into so many patent agreements with other companies - respecting their research, development and innovation and making sure that we can offer our customers thorough IP indemnification for the products we distribute."

And so it is plausable that Linux infringes Microsoft patents, but Microsoft itself is not willing to identify what those infringements are, or what patents may be involved. Microsoft now accepts that Linux is a serious player in the IT industry, but is demanding that Linux Distributors enter agreements with them in case they have any applicable patents.

And this is where their argument falls down. Microsoft does not enter patent agreements with a company unless the company is explicit about the patent in question. In 1997 the deal with Apple revolved around some very specific patents. Even when there have been valid patents Microsoft has not been so keen to license them, for example the Eolas patent.

The deal also only covers one company; Microsoft. Many other software companies hold patents which Linux may infringe. How does making a deal with only one company but not others provide any peace of mind for customers? Roberts suggests that we "need to ask customers about this rather than me. We've talked to a lot of them - before and after the agreement was signed - and the feedback we've had has been very positive."

Why should any Linux distributor be willing to enter an agreement with Microsoft when the scope and degree of infringement has not been established? Bottom line; if Microsoft have a legitimate patent, and Linux infringes that patent, then the Linux community is more than willing to address that infringement. If Microsoft is genuine about its desire to protect its intellectual property, genuine about giving the Linux community the opportunity to rectify any infringement, they will state explicity what the "balance sheet liability" is. If Microsoft are not being honest they will continue to behave like Darl McBride, trying everything possible to conceal a complete lack of actual evidence.