08.26.08
Posted in News Roundup at 5:50 pm by Dr. Roy Schestowitz

GNU/Linux
KDE
- KDE 3.5.10 Release Announcement
- KOffice Summer of Code Ends
This year’s Google Summer of Code is drawing inexorably to its close: the first indication that season of mists and mellow fruitfulness is indeed upon us.
- Amarok, the music player that does it all
If you’re a big music lover, Amarok is definitely a program you should consider. It’s so terrific that I even had one friend who hates all things KDE admit that he used Amarok. So if you like doing everything you can with your media player, give Amarok a whirl.
Fedora
Firefox
F/OSS
Leftovers
Digital Tipping Point: Clip of the Day
Vikram Dendi, Product Manager for RealNetworks 01 (2004)
Digital Tipping Point is a Free software-like project where the raw videos are code. You can assist by participating.
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Posted in Antitrust, FUD, GNU/Linux, Microsoft at 5:13 pm by Dr. Roy Schestowitz
Microsoft appears to have insisted on destroying court evidence depicting criminal behaviour. A few of the exhibits remained, however, and so has the following damaging correspondence which shows how Microsoft prepares its anti-GNU/Linux ‘facts’.
What’s cheaper than an OS you can buy outright once and install on every PC in your shop — and upgrade cost-free for eternity to boot? Why, a slew of cheesy licenses for Microsoft Windows, ‘Doze Division VP Brian Valentine claims in his latest cheerleading effort for his sales associates.
That’s right; a putatively independent analysis by ‘we’ll-conclude-anything’ whores DH Brown is going to rip Linux a new one and find that Windows is actually cheaper. How Valentine knows this is anyone’s guess. Perhaps he has a mole in the Brown organization as good as the one we have in his. Or perhaps MS simply paid for it. We don’t know.
It also appears that MS has bought off a number of Linux/Sun ‘insiders’ whose job it will be to explain to the sales team how to pitch the illusory advantages of Windows to unsuspecting IT managers. “Dumber people can run Windows” is the best advert I personally can come up with, though this is without the benefit of expensive analysts and turncoat ‘insiders’ to feed me intriguing tidbits.
IDC, by the way, is pretty much the same [1, 2, 3, 4]. Here is another old example of an anti-GNU/Linux ‘study’ from IDC. Of course it was funded by Microsoft.
Research firm IDC, in a Microsoft-funded study, has reinforced a Microsoft argument that Linux is more expensive to administer than Windows, a factor that makes Windows less expensive overall in most server uses.
There’s a lot more stuff to explore here. Other analysts like Forrester and Gartner are no better. They serve Microsoft’s business ambitions. That’s how they make money. █
“I’m thinking of hitting the OEMs harder than in the past with anti-Linux. [...] they should do a delicate dance”
–Joachim Kempin, Microsoft OEM Chief
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Posted in Microsoft, Mono, Novell, Security, Vista, Windows at 4:57 pm by Dr. Roy Schestowitz
“At Microsoft I learned the truth about ActiveX and COM and I got very interested in it inmediately [sic].”
–Miguel de Icaza
Novell, whose on-line shop requires that the buyer uses Internet Explorer, is also an embracer of ActiveX, a nasty poison which Microsoft devised in order to break the Web, bring Netscape to its knees, potentially make more back doors, and make third-party information and services dependent on Microsoft Windows.
We posted some links to ActiveX menaces here (noted related to this are here). Novell’s naive support of ActiveX is costing it now. A new Novell/Microsoft bug enables people to hijack computers, contributing to an already large pool of about 320,000,000 zombie PCs.
Attackers can exploit bugs in Novell Inc.’s iPrint application to obtain corporate information or hijack computers, security experts said today.
Novell has issued a patch that plugs multiple holes in the ActiveX control that Novell ships as part of its iPrint product, but according to Copenhagen-based bug tracker Secunia APS, one of the flaws remains unfixed.
If Novell uses ActiveX, does it mean that it turns its back on Firefox? And on GNU/Linux? Either way, it does not look good.
Novell: Vista supporter, IE supporter, ActiveX supporter, .NET supporter, XAML supporter. Just lovely. █

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Posted in America, Asia, Europe, FSF, Patents at 2:50 pm by Dr. Roy Schestowitz

Representation by Knowledge Commons to the
Office of the Controller General of Patents, Designs and Trade Marks
on the
Draft Manual of Patent Practice and Procedure – Patent Office, India (2008)
This representation addresses the section 4.11 of the Draft Manual, which provides the guidelines for defining what is excluded from patenting vide section 3(k) of the Patents Act, 2005.
The Clause 3(k) has defined what is not patentable in quite unambiguous terms. It is a well settled principle in law that a rule or a guidelines cannot change the substantive meaning of legislation. Unfortunately, this is what the Draft Manual proposes to do in its interpretation of this clause.
Indian Patents Act differs from other Patent Laws in so far as it clearly lays down what is not patentable. The Clause 3(k) is one such clause. The lawmakers were clear in their intention, “A mathematical or business method or a computer programme per se or algorithms are not patentable”. Therefore, through guidelines, what is not patentable under law cannot be made patentable through practices and procedures, as the Draft Manual proposes to do.
It might be noted that the Draft Manual is trying to bring in the amendment to the Patents Act which was subsequently not accepted in the Parliament. The relevant 3(k) amendment was, “a computer programme per se other than its technical application to industry or a combination with hardware; a mathematical method or a business method or algorithms;” By retaining the original wording and not accepting the change that software could become patentable by virtue of a technical application, the Parliament made its legislative intent clear. Therefore, by an interpretation of the act, the Patent Office cannot change the legislative intent that with or without technical application, software would not be patentable.
In trying to reach this interpretation, the Patents Office seems to have copied the relevant sections from the “Manual of Patent Practice guidance for interpreting the Patent Act 1977”, UK. This has been done without any reference that would justify such wholesale lifting of interpretation. We reproduce below what the Draft Manual says in for example 4.11 and what the UK manual says.
Indian Draft Manual 4.11.7
4.11.10 A mathematical method is one which is carried out on numbers and provides a result in numerical form (the mathematical method or algorithm therefore being merely an abstract concept prescribing how to operate on the numbers) and not patentable. However, its application may well be patentable, for example, in Vicom/Computer-related invention [1987] 1 OJEPO 14 (T208/84) the invention concerned a mathematical method for manipulating data representing an image, leading to an enhanced digital image. Claims to a method of digitally filtering data performed on a conventional general purpose computer were rejected, since those claims were held to define an abstract concept not distinguished from a mathematical method. However, claims to a method of image processing which used the mathematical method to operate on numbers representing an image can be allowed. The reasoning was that the image processing performed was a technical (i.e. non- excluded) process which related to technical quality of the image and that a claim directed to a technical process in which the method used does not seek protection for the mathematical method as such. Therefore the allowable claims as such went beyond a mathematical method.
The UK Patent Manual Clause 1.17
Similarly, mathematical methods are not patentable but their application may well be patentable. For example, in Vicom/Computer-related invention [1987] 1 OJEPO 14 (T208/84) the invention concerned a mathematical method for manipulating data representing an image, leading to an enhanced digital image. The EPO Technical Board of Appeal defined a mathematical method as one which is carried out on numbers and provides a result in numerical form (the mathematical method or algorithm therefore being merely an abstract concept prescribing how to operate on the numbers). Thus the Technical Board of Appeal rejected claims to a method of digitally filtering data performed on a conventional general purpose computer, since those claims were held to define an abstract concept not distinguished from a mathematical method. However, they allowed claims to a method of image processing which used the mathematical method to operate on numbers representing an image. The reasoning was that the image processing performed was a technical (ie non-excluded) process which related to the technical quality of the image and that even if the idea underlying an invention may be considered to reside in a mathematical method, a claim directed to a technical process in which the method is used does not seek protection for the mathematical method as such. Therefore the allowable claims went beyond a mathematical method as such because they specified the physical entity the data represented and the technical process in which it was used.
Not only are the sentences lifted verbatim, with only some minor re-arrangements, even the reference to the case in the UK Manual, Vicom/Computer-related invention [1987] 1 OJEPO 14 (T208/84), is not listed in the cases given in the Annexure List of cases for the Draft Manual.
According to the Draft Manual, the allowable claim goes beyond a mathematical method as it specifies a physical entity (signals) and the technical process (image processing). Simply put, what the patent office is claiming is that while a mathematical method cannot be patented, however its application to a specific technical field – image processing in the Vicom case – is patentable.
The problem with this approach is that while the patent office may regard image or signal processing as a technical application, what is being patented is still a mathematical method. The mere fact that it is a mathematical algorithm applied to a specific application with specific physical entities does not change that the content of what is being patented, which is still the mathematical algorithm. Only the scope of the patent is being narrowed by limiting it to image processing.
If the above is accepted, all that would be required for securing software patents for the actual mathematical method is to file separate applications for each of the application of the mathematical method, in this case the digital filtering algorithm. This is merely changing the form of the patent application and not its substance. We find such an interpretation completely contrary to the patent law that has been framed in this country.
The Image Processing case is particularly important, as if it is accepted, all compression techniques would also be patentable on similar grounds. Already, the practices of USPTO and EPO have lead to a situation that a number of standard formats such as JPEG and GIF have come under patent threats. Since any company that uses digital pictures – cameras, images on the web, etc., can be sued for infringing such patents, the potential economic consequence of such patents is enormous. This is why software patents under any garb, are particularly pernicious.
One of the earliest software patents was that of the LMZ compression, which was used in the GIF format. It is now widely accepted in the software industry that such patents are in fact patents of mathematical algorithms. It was because the GIF format came under a patent threat that other formats became popular. However, similar threats now exist for other formats for image processing. In most such cases, the software industry has had to file review applications in USPTO to invalidate such patents. We see no reason why we should follow this tortuous path, when we have a clear law on this on our statuette books disallowing software patents.
The language of Section 3 k) of the The Patents Act, 1970 makes it clear that unlike certain countries, where the Patents Offices have been issuing patents for mathematical or business methods and for software, the Indian Parliament has considered software per se not to be patentable.
The clause that software per se is not patentable would mean that only software as a part of a larger invention of which it is a part could be considered for a patent as a whole provided it meets the criteria of patents given in the Act. This makes clear software “standing alone” is not patentable under Indian law. It is pertinent that as software cannot execute on its own without any hardware, this means that software running on general-purpose data processing machines (computers) do not qualify for patents. The mere addition of conventional data processing equipment to a software application does not turn that application into an invention. Only if the software application is a part of a larger system and the system as a whole is eligible for a patent, can the invention be patented as a whole. This is the intent of the Act and therefore we are sure that the Patent office would take this into cognizance when deciding on patent claims.
If we take this clause of software per se not being patentable with the other part of the clause the intent of the Law becomes even clearer. It is clear from 3 k) above, that any mathematical method or a business method or a mathematical algorithm cannot be patented, irrespective of whether it is embodied in software or not. The non-patentablity of business or mathematical method or algorithm is even broader than the non-patentability of software per se and covers all software applications/computer programs.
All software or computer programs are nothing but a sequence of instructions that convert a set of inputs to a set of outputs. This is the definition of an algorithm.
As per 3 k), a mathematical method is not patentable and as computational methods are a sub-set of a mathematical methods, a computational method is not patentable either.
Computer programs essentially convert an algorithm, business or a mathematical method into a sequence of machine executable steps. All computer programs are therefore algorithms/mathematical or business methods implemented for execution on a computer. As algorithms, mathematical or business methods are not patentable under Indian law, no software or computer program, which can run on general-purpose machines, can be considered patentable. The only exception, which can be read into the Patents Act “computer program per se”, is that computer programs in conjunction with special purpose hardware or equipment, can be considered for patenting as a whole, provided it meets all other criteria of patentability given in the Act.
Courts in all parts of the world have held that subject matter which would have the practical effect of preempting laws of nature, abstract ideas or mathematical algorithms is ineligible for patent protection. This age-old and time-tested precedent effectively establishes the ineligibility for patent protection to laws of nature, abstract ideas and mathematical algorithms. If these could be patented, then in effect one would be patenting the tools of scientific enquiry itself, something no patent law allows, as it would lead to halting scientific progress.
Courts have also held that regarding patentable subject that the inquiry into whether subject matter is eligible for patenting is one of substance, not form. This requires that one look, not simply at the language of the patent claim to see if it recites a structure of multiple steps or components, but also at the practical effect of the claim to see if it in fact covers — or otherwise would restrict the public’s access to — a principle, law of nature, abstract idea, mathematical formula, mental process, algorithm or other abstract intellectual concept. Otherwise, it would make the determination of patentable subject matter depend simply on the draftsman’s art and would ill serve the principles underlying the prohibition against patents for ‘ideas’ or phenomena of nature. By skilled patent drafting, one should not be able to start patenting essentially abstract ideas, mental processes and newly discovered laws of nature or mathematical algorithms.
We are aware that though the Law generally holds that such matters are not patentable, a number of patent offices, particularly the US PTO and the EPO have been granting patents recently for software also. This has already created a situation which Tim Berners-Lee, one of the founders of the World Wide Web, director of the World Wide Web Consortium that sets global standards for the Internet, calls as the biggest threat to software development.
All companies developing emerging technology are threatened by the prospect of patent licensing royalties. You could never find out what patent could possibly apply to what technology. You could never guess what things people might have the gall to say they have patented already. It really is a universal fear. (Tim Berners-Lee at Emerging Technologies Conference at the Massachusetts Institute of Technology, September 29, 2004.)
Major software companies such as Cisco, Oracle, Adobe and even Microsoft earlier have come out against software patents. They have held that copyright provides an appropriate level of protection and patenting software is harmful to the software and other industries.
It has also been the basis on which the Small and Medium-sized Business Community in the EU objected to the formalisation of EPO practice and acceptance of software patents. The same argument would apply to Indian software industry as well.
The above clearly shows that no application of mind has taken place in either understanding of the Indian Patents Act or its intentions. While the EPO or the UK practices could be used by the Patent Office to justify what it seeks to do, it cannot do so without first identifying the Patents Act and practices in these countries and the Patents Act and practices in India.
In India, it has been considered patents should be granted only when public good demands granting of such state protected monopolies. This was the practice also in the UK and the US. It is still the basis of the practice in most countries. It is only in the last few decades that the US, followed by the UK, Japan and now the European Patent Office has tried to change the interpretation of their Patents Acts to expand the scope of patentability. This attempt to enlarge the scope is from their national interest as they hold the largest number of patents. Therefore, their belief that strengthening the patent regime internationally will help their companies to build world-wide monopolies.
It is not in India’s national interest or in the interests of its people to expand the scope of state protected monopolies through expanding the patent scope. India’s national interest is best served by restricting the scope of such monopolies. Therefore, the patent regime in India should work on the presumption that patents are to be given only when there is a decisive case for patents. This has been the basis of the Indian Patents Act and is in tune with fundamentals of such legislation world over. It is only the deviation in patent interpretation that has produced a scenario where business methods, software and also mathematical methods are also being patented.
The US Supreme Court has now been correcting some of the excesses that has occurred in the US patents interpretation by the Federal Bench. We see no reason why India should change it understanding of patentability following in the footsteps of the US and the EPO and subsequently need to correct such excesses.
We will not recapitulate the case against software patents. We consider that case is now accepted in Indian law and the Indian Patents Act explicitly prohibits software patenting. We are only concerned here with the attempt to defeat the non-patentability of software patents by an interpretation that runs counter to the Indian law.
We therefore would suggest that the relevant sections of the Draft Manual – namely the section 4.11 should be redrafted keeping the legislative intent in mind. Otherwise, it will constitute a breach of privilege of the Parliament.
Prabir Purkayastha, Knowledge Commons
Sd.-
SP Shukla, National Working Group on Patent Law
Sd.-
G. Nagarjuna, Free Software Foundation of India
Sd.-
Amit Sengupta, All India Peoples Science Network
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Posted in News Roundup at 8:58 am by Dr. Roy Schestowitz

GNU/Linux
- gOS – a good OS for your Mum
- Who writes Linux? (And how you can too!)
- 10 common mistakes to avoid when you’re installing Linux software
- Video: Common mistakes to avoid when you’re installing Linux software
- ‘IDTV’ chipset runs Linux
Swiss semiconductor vendor Micronas has announced a Linux-based reference platform for flat-panel, H.264 compatible HDTVs.
- I’m the last to know: Linux powers the Kindle
- Syncsort Backup Express Introduces Linux Support to its Advanced Recovery Data Protection and Disaster Recovery Solutions
- Games : Dirk Dashing v1.1 released!
- OCLUG August Kernel Walkthrough: The Boot Process
- Spinmeisters taking over the Linux world
Or as one publication puts it, Jim Zemlin: The New Center (sic) of Linux Gravity. Probably that’s the impression the writer got.
- Going the extra step but not the extra mile [Microsoft Snubs Its #1 Rival (According to Ballmer)]
There’s one problem with this — you’ll notice that I am using Ubuntu, yet it still speaks about Macs.
- South American FOSS show is a big deal
- List of New Features in Ubuntu 8.10 “Intrepid Ibex”
- 5 KDE3 Applications I Need on a Daily Basis
- 21 of the Best Free Linux Text Editors
- Linux MIDs gain ‘fancy’ GUI
- Pre-installed Linux Notebooks
- 5 Factors Making Ubuntu Server Business Ready
- Review: Motorola U9
The sleek U9 is wider but thinner than earlier Motorola clamshells. Unobtrusive closed, it opens big to position the mike for best sound-quality. It strongly resembles Motorola’s earlier non-Linux-based PEBL phone, but slimmed down, and with an OLED external display.
- PCLinuxOS Saves the Day … Again
Thursday, my daughter’s Dell Inspiron laptop was working fine. She finished as usual, just closing the lid, which puts the laptop in suspend/hibernate mode.
[...]
After the updates, I installed a few things automatically, like fonts, Win32 codecs, dvdcss, etc. Then I asked her what her immediate needs were. A PDF-generating publishing tool for the newsletter. Scribus fit that bill. A music player: Amarok. “Can this play DVDs?” Kaffeine. MSN/AIM/IRC. I gave her both Kopete and Pidgin. I also installed OpenOffice, since I knew she had had MSOffice on the old system. Firefox3 for a familiar browser. Then I handed it to her.
She opened Scribus first. “Hey, I can use this!” She closed that, and stuck in a DVD movie. A moment later, a dialog popped up asking her what she wanted to do with it. She clicked “Play with Kaffeine”, and sure enough, there was her movie. This really started her laughing.
- Internet TV broadcaster targets MIDs
F/OSS
Leftovers
Digital Tipping Point: Clip of the Day
Richard Stallman Part 14 (2004)
Digital Tipping Point is a Free software-like project where the raw videos are code. You can assist by participating.
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Posted in Deception, ECMA, GNU/Linux, ISO, Java, Microsoft, Mono, Standard, Windows at 7:57 am by Dr. Roy Schestowitz
The OOXML scandals merely part of a pattern
Microsoft has rigged the ISO vote (the European Commission is investigating and Redmond press acknowledges). ISO too is claimed to have pretty much rigged the vote on complaints against it (and Microsoft/ECMA). Since old articles continue to disappear and Microsoft revisionists put history away along with the ashes, we though we should bring up two old incidents that are no longer covered on the Web. They can be fetched from the Web Archive though.
The first is a convincing accusations against Microsoft gaming a Linux versus Windows poll in a Microsoft-affiliated press, of which there is plenty.
Linux users are accusing the Microsoft-affiliated news site of tampering with the results of an online poll. They believe that the numbers were altered to ensure that a Microsoft-made system was chosen as the winner.
[...]
Reichard also notes that at some point during the poll Linux “magically” lost votes. “At one point Linux had 37 percent of 37,000, which works out to just over 14,000 votes. But when the voting reached 205,000, the poll showed Linux had 6 percent, which is only about 12,000 votes.”
The second example is actually much better because there is damning proof. Read this and be disgusted.
By 21 December, more than two-thirds of the respondents (69.5 percent), said they planned to deliver some applications by Web services by the end of 2002, with a large majority of those (nearly half the total sample) planning to use Java. Only 21.5 percent said they planned to use Microsoft .Net — less than the figure (23.5 percent) planning to use neither.
But by the time the poll closed, on 5 January, the position had dramatically changed, with three quarters of voters claiming to be implementing .Net. This apparent sudden change of heart over the Christmas period appears to be the result of a concerted campaign within Microsoft.
ZDNet UK logs reveal rather obvious vote rigging, and prove that it originated from within Microsoft:
* A very high percentage of voters are from within the microsoft.com domain.
* There is a very high incidence of people attempting to cast multiple votes, even though the poll script blocked out most attempts at multiple voting. The one that wins the prize made 228 attempts to vote. This person was from within the microsoft.com domain.
* Several of the voters evidently followed a link contained in an email, the subject line of which ran: “PLEASE STOP AND VOTE FOR .NET!” We know this, because our logs include the Web address where visitors browsed from; when people click there from a Microsoft Exchange email message, Exchange helpfully gives us the subject line and username. The people who followed that link all had email addresses in the microsoft.com domain.
* There is also clear evidence of automated voting, with scripts attempting to post multiple times.
Why are those links breaking and why do articles ‘dissolve’ over time?
Interestingly enough, the previously-mentioned (and official) Boycott Microsoft site has just disappeared as well. It has been fine for a decade. Today’s IRC log, which will be published tomorrow, has the details.
Microsoft’s dirty fight for .NET continues to this date. Never forget the "Slog" and those 'extensions', not to mention secret APIs. Novell is a major part of it now because it owns Mono. When you write about Mono, apologists will show up. They try to shut up critics. That’s just what they try to achieve.
A common excuse they bring up is ECMA standards. Public standards are unrelated to patents; put differently, it is possible to have an ECMA standard with accompanying patents, not to mention the possibility of ‘extensions’ that are covered by new patents (even submarine patents).
Software patents are far from the only issue here. It’s also about the composition of the cloud and whatever it integrates with. It’s about the API. He who control the API….
Mono is not a root to GNU/Linux success and FOSS adoption. It doesn’t replace the competition more than it makes it stronger. You can’t beat Microsoft at its own game, for which it sets the rules (both legal and technical). █
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Posted in Asia, Free/Libre Software, FSF, Law, Microsoft, Patents at 7:04 am by Dr. Roy Schestowitz

Intellectual monopolies are insane and more so with software patents, which pertain to thoughts, not just devices or actual implementation. Béranger illustrates just how mad the USPTO has gone with an excessive number of patents and a lenient set of requirements. Would anyone believe that it takes 9 special ‘inventions’ to merely produce a cardboard box? He ranted about this before.
39 years after the man was on the Moon, a bloody cardboard box is still covered by 9 patents!
But anyway, that’s a distraction and merely some timely reminder of how far patents can go. We wrote about the situation in India quite a lot over the past month [1, 2, 3, 4, 5, 6, 7, 8, 9, 10]. FSF India has finally released its official response to new attempts at software patents from the back door. Microsoft, along with its local and American allies, are largely responsible for the changes. It’s not too later to water them down.
Even if other countries made such provisions, India as the world’s largest democracy should not create an society where people at large are excluded from participating in creative engagements. As a country with a large human resource, we have a bigger challenge of harnessing more creativity among the country, and that will happen by bringing each and every citizen under creative participation and not by bringing each and every invention under allowable patents category. India should lead the rest of the world by clearly stating in the manual that computer programs are not patentable in India by any other way and are per se protected only under copyright.
Having reviewed an early draft of this letter, I hoped that the letter (sent on behalf of the FSF) will become an open one at some stage. It contains insights that can be generalised and then used to squash other deform [sic, not reform] attempts. India is not alone. █
Further references:
Those interested in reading the Full text of Section 3(k) relating to software patents can check:
http://osindia.blogspot.com/2008/08/full-text-of-section-3k-relating-to.html
The full Draft Patent Manual is at:
http://ipindia.nic.in/ipr/patent/DraftPatent_Manual_2008.pdf [PDF]
Various comments Received for the Draft Manual (Including Pro Patent)
http://www.ipindia.nic.in/ipr/patent/manual.htm
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Posted in Finance, Fraud, Microsoft at 6:28 am by Dr. Roy Schestowitz
The following old article is hugely damaging and we are fortunate to have found a copy of it in the Web Archive. It vanished from the Seattle Weekly.
This article, which is titled “Microfraud?”, provides a testimony from a Microsoft insider who claims financial fraud. Interestingly enough (but not so surprisingly), Microsoft paid him a fortune to go away, keep quiet, and for the terms of the settlement not to be disclosed (recall Iowa and Caldera for similar examples).
Here are the opening paragraphs from this article.
THE ALLEGATIONS WERE shocking: For years, Microsoft has systematically distorted its profit figures in an effort to consistently beat Wall Street expectations and keep its stock price steadily rising. The false reports would violate SEC regulations, and amount to outright fraud.
More shocking was the source of the allegations: Microsoft’s chief of internal audits, Charlie Pancerzewski, who reported directly to the company’s chief financial officer.
Most shocking of all was what happened to Pancerzewski when he reported the suspicious bookkeeping to his supervisors, Microsoft CFO Mike Brown and chief operating officer Bob Herbold, in the spring of 1995. Soon afterward, Pancerzewski—who for nearly five years had received stellar performance evaluations—received his first-ever unsatisfactory one, and was eventually forced to resign.
Two months ago, Microsoft quietly settled a lawsuit containing these allegations, filed in 1997 by Pancerzewski under the Whistleblowers Protection Act. The auditor claimed he was wrongfully terminated after telling his supervisors that Microsoft might be breaking securities and tax laws. The lawsuit made its tortuous way through several rounds of pretrial motions until last fall, when US District Judge Carolyn Dimmick denied Microsoft’s final plea for summary judgment, finding credible evidence that Microsoft may have violated SEC rules, as Pancerzewski alleged. Shortly thereafter, Microsoft and Pancerzewski settled out of court. Terms of the agreement were sealed, but one source who claims familiarity with the case says that Microsoft paid Pancerzewski $4 million.
Microsoft is claimed to have lost $18 billion in 1998. That is another article that magically vanished, but we managed to find a copy.
More recently, one financial manager from Microsoft was prosecuted for embezzlement [1, 2, 3]. If the legal system is functional, more Microsoft employees might need to be put in prison and it goes all the way to the top (managers). One of them ended up jailed about a month ago. There are other examples, such as Robert Bach, a Microsoft chief who was accused of inside-trading [1, 2]. There was never a trail, but there sure was evidece.
Novell, for that matter, is no saint, either. Novell too is said to be cooking its books, but the SEC does not see it.
There is a lot of investigation to do on this, and we shall continue to do it. Please post any corrections you may have so that we don’t make improper accusations. █
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