Microsoft, Novell spar over Linux agreement

Novell's CEO on Monday in the US issued a letter to the open-source community disputing Microsoft's contention that Linux infringes on Microsoft patents.

In the open letter, Novell's Ron Hovsepian outlined the rationale behind an agreement, signed early this month, under which Microsoft will offer support and legal indemnification for users of SuSE Linux, a Novell product line. The two companies also agreed to work on product interoperability.

Hovsepian also took issue with comments made by CEO Steve Ballmer last week that Linux "uses our patented intellectual property."

The deal between Microsoft and Novell calls for the two companies not to sue each other's customers over patent issues.

But that patent provision, Hovsepian said, did not amount to an admission that SuSE Linux infringes on Microsoft's patents.

"We disagree with the recent statements made by Microsoft on the topic of Linux and patents. Importantly, 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," Hovsepian said.

A Microsoft representative on Monday in the US issued a response to the Novell letter, saying the two companies disagree on this point.

"We at Microsoft respect Novell's point of view on the patent issue, even while we respectfully take a different view," the statement said. "At Microsoft, we undertook our own analysis of our patent portfolio and concluded that it was necessary and important to create a patent covenant for customers of these products."

In his letter, Hovsepian indicated that Microsoft initiated the pursuit of a patent covenant. The intended effect was to give customers who use both Windows and Linux "peace of mind" from potential legal problems, he said.

In the Microsoft statement released Monday, Microsoft called the legal aspect of the deal an effort to "put in place a new intellectual-property bridge between proprietary and open-source software."

Ballmer has also indicated that Microsoft has tried to forge similar legal and technical agreements with other Linux distributors.

However, there is no deal with leading Linux distributor Red Hat. The day after the announced Novell deal, Red Hat responded with a statement saying that it will not pay an "innovation tax."

Eben Moglen, the attorney representing the Free Software Foundation, which created the General Public License (GPL) used by Linux, said Microsoft's deal with Novell puts Red Hat at a competitive disadvantage.

"Either customers desert Red Hat to go to Novell, to get safety, or Red Hat will be forced into a similar deal with Microsoft," Moglen told Reuters.

Moglen has also voiced concern that Novell's pact with Microsoft could violate the license.

The pact calls for a Microsoft payment to Novell of about US$380 million and Novell payments of at least US$40 million over the course of the five-year deal to ensure that Microsoft won't sue SuSE customers for patent infringement.

When the agreement was announced with much fanfare, several industry observers expressed scepticism that the honeymoon would last.

Concerns arose that the partnership would be perceived as Microsoft forcing its patent philosophy onto the open-source world. The open-source community operates under a system that largely shares intellectual property, whereas Microsoft comes from a world of proprietary software.

Raven Zachary, an analyst at The 451 Group, said in a recent interview that the agreement gave new prominence to legal protection.

"Indemnification was a hot issue a few years ago, and now it seems to be back," Zachary said. I think it elevates the level of fear."

Another analyst said the companies' verbal barbs are far from shocking.

"This shouldn't surprise anybody," said Brad Reback, a CIBC World Markets analyst. "It's just corporate posturing, and the agreement remains intact."

Patent attorney Bruce Sunstein, of Bromberg & Sunstein in Boston, shares that sentiment. He noted that both companies stand to gain from the agreement and, as a result, have a strong incentive to keep it in place.

"Microsoft mainly wants to sell licenses...and if (Microsoft leaders) can find a way to do that and sit in the Linux environment, that's good for them," Sunstein said. "Fundamentally, they're not interested in patent litigation. Fundamentally, they're interested in selling licenses."

The squabbling between Microsoft and Novell also shows signs that the deal might have been rushed, Zachary said on Tuesday in the US, noting that the companies' deal announcement came within a week of Oracle announcing that it would sell Red Hat Linux support.

"After Oracle announced its Unbreakable Linux campaign, Novell and Microsoft probably felt compelled to announce something fast," Zachary said.

Oracle, in essence, validated Red Hat as the standard for Linux, placing Novell in an awkward position with its SuSE Linux, he added.

"Novell had to do something dramatic, and by selling to the Microsoft customer, it showed it was a strong enterprise play," Zachary said.