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04.22.11

SCO’s Strategic Consultant Mike Anderer Foresaw Microsoft-Organised Patent Lawsuits Against Linux (Through Small Companies)

Posted in GNU/Linux, Google, Patents, SCO at 10:49 am by Dr. Roy Schestowitz

Ballmer on patents

“On the same day that CA blasted SCO, Open Source evangelist Eric Raymond revealed a leaked email from SCO’s strategic consultant Mike Anderer to their management. The email details how, surprise surprise, Microsoft has arranged virtually all of SCO’s financing, hiding behind intermediaries like Baystar Capital.”

Bruce Perens

Summary: Important information about Bedrock, those who bolster their case, and what we know about Microsoft’s role in arming patent trolls, CIA coup d’état style

The poorer the patented ‘invention’ is, the more it will probably be worth (at lease once patented and never invalidated) because the more damage it can cause owing to breadth. The Linux Foundation and OIN recognised this when they defused attempts by Microsoft to pass around Linux-hostile patents, i.e. ammunition to disruptors (even that is not Microsoft’s innovation). And right now there is a ridiculous patent being used against Android. Who is behind it? A defunct entity known as Bedrock (more details in our IRC logs). There is a paywall standing in the way of this article/analysis which contains “EVIDENCE OF AN UNACCEPTED OFFER FROM INTELLECTUAL VENTURES TO BUY THE BEDROCK PATENT”.

Intellectual Ventures, created out of Microsoft money, is known to be using a lot of “satellite” companies to sue/extort companies on Intellectual Ventures’ behalf. Only rarely does Intellectual Ventures sue directly, but sometimes it does. It’s a proxy game and the victims struggle to validate the connections in the courtroom because when papers get exchanged as opposed to something physical, traces can vanish. We have covered several cases like this.

“Remember Microsoft trying to sell some of its patents that read on Linux, or so they claimed, to patent trolls? OIN played man in the middle on that one, but who is to say that was the only one?”
      –Pamela Jones, Groklaw
“Steven J. Vaughan-Nichols wrote a great article about the Bedrock v Google decision,” writes walterbyrd in IRC. “Idiotic Anti-Linux & Google Patent Decision. Red Hat has sued Bedrock to get the patent revoked for numerous reasons. Among others, they point out that Linux, which dates to 1991, predates the 1997 patent; that no one has ever used the patent; and that in any case Bedrock has no claims to the patent,” he quotes. Groklaw too is linking to SJVN (Steven J. Vaughan-Nichols) and adds: “If I might remind you, Mike Anderer told us years ago, back in 2004, that this was Microsoft’s plan, to see to it that FOSS companies got sued over and over again for patent infringement, until they gave out: “In a world where there are $500 million dollar patent infringement lawsuits imposed on OS companies (although this is not completely settled yet), how would somebody like Red Hat compete when 6 months ago they only had $80-$90 million in cash? At that point they could not even afford to settle a fraction of a single judgment without devastating their shareholders. I suspect Microsoft may have 50 or more of these lawsuits in the queue. All of them are not asking for hundreds of millions, but most would be large enough to ruin anything but the largest companies. Red Hat did recently raise several hundred million which certainly gives them more staying power. Ultimately, I do not think any company except a few of the largest companies can offer any reasonable insulation to their customers from these types of judgments. You would need a market cap of more than a couple billion to just survive in the OS space.” So that’s what he said. And 50 or more lawsuits lined up means using proxies, obviously. Remember Microsoft trying to sell some of its patents that read on Linux, or so they claimed, to patent trolls? OIN played man in the middle on that one, but who is to say that was the only one? That’s why it’s an antitrust issue, I’d say, using patents like this as an anticompetitive weapon. And if you want to know what is wrong with software patents, the damage they are doing, read the quotations from various business executives (like Andy Grove) in the footnotes to this article.”

Here is the link given to analysis of important news reports which are only in the Web Archive now (content ages and rots quite sadly, along with the crucial evidence). We reproduce this below in the interests of preservation:

Legal

S2 ‘mystery man’ Anderer speaks on MS, SCO, and licensing

Friday March 12, 2004 (05:30 PM GMT)

By: Chris Preimesberger

Mike Anderer was the author of the S2-to-SCO Group memo that comprises the “Halloween X” document that was released to the press by Eric Raymond last week. Anderer, the CEO of S2 and the middleman in the SCO Group’s $50 million PIPE transaction of last October 16 contacted us today, and while he is under a non-disclosure agreement and can’t say very much about the $50 million PIPE deal, what follows are some of the thoughts he can share.

I am certain people would like to know what is happening but I cannot talk to you without permission. I will tell you my background is integration and I am OS agnostic; the more there are the better. I will file close to 20 patents this year for companies in many spaces, including homeland security, anti-terrorism, several grid computing and virtual machine patents, and, ironically, I should have one issued in the expiring and disappearing e-mail arena. It was initiated 4-5 yrs ago.

I have helped many companies and individuals who run companies in the GNU/Linux, BSD, and Unix world as well as those in the Microsoft world. I admire the good parts and despair the bad parts.

Most of my time is currently spent on new technologies on several different platforms. Many of my companies and several of our offices have been merged into other companies, moved or sold as part of a technology deal, some even sold during the deepest parts of the downturn. I helped build the channels for most of the products that corporate America is currently using and some they will be using soon. In several cases, I am finally finding or developing ways to solve problems I have been working on for the last 20 years. The only way I can hide is to work so hard that it becomes close to impossible to track all the companies I have owned, bought, sold, rolled up, or sat on the board of. If you include the ones where I helped entrepreneurs and companies through tough times, or sat on non-profit boards, the list would be even tougher to follow.

Anybody who knows me or really analyzes what they found on the Web will find I don’t hide well. I also have a lot to say in most situations.

The following is simply my opinion. This is all I can really give you considering the NDA. As for the PIPE deal, I cannot comment at all, but I also would have nothing of interest to add beyond what has already been made public.

I would state that this licensing project represented only a small fraction of my time over the last year and has completely gone away in recent months. This was a job for me, and licensing IP has been an increasingly significant portion of my work.

Many thousands of licenses have been sold to Unix over the years. I cannot think of any major hardware or software company or even university that does not have a license directly or indirectly. If you see the world moving forward as a (GNU/Linux/BSD/Unix)/Windows world it does not take an MIT rocket scientist to think it would make sense for the largest software company in the world to increase their rights by taking another license (remember they did develop and own a portion of the code originally sold as MS Xenix). In fact I saw several postings on Slashdot hammering them for including what people saw as BSD property (with proper copyright attribution) in some of their products. It was also no secret that Microsoft licensed and even purchased companies in this arena over the last several years (look where Windows Services for Unix came from). They developed some pretty incredible functionality into things like SFU 3.5 (which I just got for free with a systems magazine). If you consider this licensing an indirect financing of SCO, then everybody (or at least the thousands of licensees) is responsible at some level. The licenses in some cases exceeded $100 million, so these were not even close to the largest ones. The hard part for me was finding somebody who was not already a big licensee.

Just as I see Microsoft developing stronger interoperability from their side, I see a huge community developing stronger connectivity from the GNU/Linux/BSD/Unix side. We will work from both sides and hopefully contribute to making things more functional for customers whatever they choose. The only really interesting point here is that people finally benefit from more stuff working together. It still takes work, but things are getting better in many areas.

I think one real issue, that people are skirting, is who will be the ultimate guarantor of IP-related issues in a world that is governed by the GPL and GPL-like licenses. I could easily see IBM, HP, Sun, and many of the other large hardware players solving this problem tomorrow by settling the dispute with SCO and maybe even taking the entire code base and donating it into the public domain. I know this is what I originally thought would happen, at least the settlement part. I am not certain what people who paid tens of millions for licenses would say if what they paid for was now free, but that is a different issue.

In a world where there are $500 million dollar patent infringement lawsuits imposed on OS companies (although this is not completely settled yet), how would somebody like Red Hat compete when 6 months ago they only had $80-$90 million in cash? At that point they could not even afford to settle a fraction of a single judgment without devastating their shareholders. I suspect Microsoft may have 50 or more of these lawsuits in the queue. All of them are not asking for hundreds of millions, but most would be large enough to ruin anything but the largest companies. Red Hat did recently raise several hundred million which certainly gives them more staying power. Ultimately, I do not think any company except a few of the largest companies can offer any reasonable insulation to their customers from these types of judgments. You would need a market cap of more than a couple billion to just survive in the OS space.

Since the GPL type license agreements push the liability to the users, who do you go after? I think this is a key problem. Nobody wants to be the ultimate guarantor for software that was free (or close to it). I think the dispute with SCO would have been settled a long time ago if everybody knew this was the last one. The problem is there will probably be hundreds or even thousands of these disputes in the future and the targets will be the companies with the deepest pockets. Even if the large vendors disclaim all responsibility initially, I do not think the customers will accept this from their vendors for very long. In the meantime, I don’t see anybody being in a hurry to write the first big check.

The world of software is changing. I think everybody sees that part on the product side, but the economic underpinnings are changing too. It used to be you included R&D and patent development costs into your license add your costs and a markup and you could make a living. We relied on cross-licensing, licensing, and innovation, and our ability to prevent other people from copying our work without permission. Now things are shifting, but I am not certain anybody has completely figured out this new model, and if you think it is just any one company that is concerned about this, you are wrong.

I do think things will work out, and the sooner the better. I believe the software industry is in an incredible renaissance and that means maybe there will be a lot more people out there making things better and a couple fewer people with enough spare time to flame under five separate handles, all registered as underage so they can exploit the better privacy laws we afford to children.

I do appreciate all the effort and help people have provided by digging up old sites and even stuff I had long forgotten about. I am still hoping people dig up some of the more positive projects I have been involved with. I have also had several long lost friends contact me. I think they thought I might need some support.

– Mike

Microsoft Florian (aka “FOSS[will be killed by]Patents”) is rubbing this in people’s faces (consider the headline, “Texas jury finds against Google in Linux patent case, determines damage award of $5,000,000″). ZDNet feeds Microsoft Florian’s drama and so does CNET, a sister site in some sense (ZDNet bloggers also played along with SCO's side). Florian keeps bragging about the number of lawsuits against Android and amplifies the magnitude of the threat to Android by repeating news like this. Harry McCracken, the Microsoft booster, does something similar to what Florian did some months ago, amplifying the perceived problem. Let’s not forget other Microsoft mouthpieces like Rob Enderle and Paul Thurrott with his anti-Android rhetoric (patent-related accusations and FUD). Meanwhile, the president of the FFII is told that “Google should really start to actively fight against #swpat it could donate a million to #ffii and #endsoftwarepatents.org each.” The messenger is right in this case and we wrote about it earlier this month. Google ought to know that just getting more patents won’t help it against trolls.

“Patent incumbent H.264 will soon lose its dominance as YouTube, the world’s biggest online video content creator, switches to WebM, the free and open source codec.”
      –Muktware
Could Google work on research that proves ties to Microsoft and then initiate legal action for these mafia-like tactics (including the SCO and maybe Elliot saga)? Potential patent trolls whom we know Microsoft was trying to feed with anti-Linux patents are pretty solid evidence [1, 2, 3, 4, 5, 6]. Microsoft never refuted this, it only tried deflection by announcing CodePlex news noise within hours. There is also MPEG-LA, which Microsoft is paying. Google does mitigate the issue by addressing that attack vector the way it should. From the news: “Patent incumbent H.264 will soon lose its dominance as YouTube, the world’s biggest online video content creator, switches to WebM, the free and open source codec.” OIN’s growth [1, 2, 3] is not enough to prevent MPEG-LA from acting like a mafia, bidding/searching for Google assassins and then getting exposed. Fortunately, the US Justice Department launched an investigation over this and I should probably mention, based on my private discussions with Microsoft Florian, that Florian has contacts inside MPEG-LA, which he keeps promoting. Yes, I can produce evidence to show this, but he probably won’t contest or challenge the claim for fear of more damage control.

Here is Steven J. Vaughan-Nichols explaining that Microsoft Florian is falsely amplifying the scare over patents and Android:

Now, I hate all software patents, but even if I didn’t, this patent is garbage. As I read it, I think I violated it myself back in the 80s. I mean, just read it, it’s a description of how to use hashing with a linked list. Come on! That might not be programming 101, but it’s not far from it!

Red Hat has sued Bedrock to get the patent revoked for numerous reasons. Among others, they point out that Linux, which dates to 1991, predates the 1997 patent; that no one has ever used the patent; and that in any case Bedrock has no claims to the patent. This case, however, has not been settled yet.

Yes, I know, I know, you’d think that case would have been settled first and then the matter of Red Hat’s customers would have been addressed, but that’s not how it works in the U.S. Verdict first and trial later to paraphrase Alice in Wonderland’s Red Queen.

Now some people, such as Florian Mueller, would have you think that “This patent infringement case has major implications for the IT industry in general and for Linux in particular.” The emphasis is his. I disagree.

I think this is an especially striking example of a bad patent decision by the EDTX. It only shows just how bad the U.S. patent system has become that such a ridiculous suit could ever be taken seriously never mind actually winning. Google should appeal this case and, unlike other recent software patent cases, such as Microsoft vs. i4i, I’d expect the anti-patent side to win.

It remains to be seen if Microsoft also plays a role in Apple’s lawsuits (see this nice new parody), but given motivations, it is unlikely that Apple needs Microsoft’s encouragement to sue Google’s Linux-based platform. It should be noted, however, as we noted last year, that very shortly after Apple sued Android Microsoft made a formal statement validating and endorsing Apple’s action, adding that there will be more of that. It was almost as though the pair had conspired.

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7 Comments

  1. twitter said,

    April 22, 2011 at 1:30 pm

    Gravatar

    What’s really amazing about Florian is that he insists that Microsoft does not use patents in an exclusionary way. This is about the most damaging thing he can do, pretending that a segment of the free software community believes that patents are reasonable, fair and non discriminatory. PJ doubts you can find three programmers of any type that believe that software patents are anything but an abomination. People need to hold Florian accountable for that because Microsoft’s strategy is obviously exclusionary as PJ put it back in 2004,

    using the courts as an aggressive competitive weapon, is a misuse of the legal system. It’s a form of blackmail, a leftover artifact from the dot.com bubble days. It can only work for so long before everybody gets sick of it and them and changes the patent laws.

    Let’s get those laws changed before any more damage is done to software freedom and legitimate business. Abolishing software patents is a good start.

    Dr. Roy Schestowitz Reply:

    It is the only start which goes in the right direction.

    twitter Reply:

    It is also a start with overwhelming professional and community support. The opposes are small group of lawyers and other representatives of an even smaller group of software owners. That people debate the issue at all is a perverse result of press consolidation under the same owners and corruption of press and legal institutions. People should push for this relatively easy to win issue.

    Dr. Roy Schestowitz Reply:

    Yes, the press is not open for the average person to participate.

  2. Needs Sunlight said,

    April 23, 2011 at 5:42 am

    Gravatar

    The “Halloween Documents” are worth looking at again.

    Here is Halloween X that was mentioned above:
    http://www.catb.org/~esr/halloween/halloween10.html

    twitter Reply:

    Yes, that is worth reading again to compare to current M$ propaganda and because there are insightful comments from as late as 2007. The focus at the time ESR wrote this was SCO’s copyright attack but we now see that Microsoft was also lining up patent attacks with companies like IPX and trying to keep SCO patents out of Novell’s hands for later use. The response to this leak was all about the exclusion and destruction of free software, something that clearly contradicts Microsoft’s current “Open” friendly propaganda.

    The timing is also interesting. This memo was leaked and acknowledged by SCO just five months before Dan Lyons launched the public face of Microsoft’s patent extortion in 2004. A few days after the leak, the author laid out much of Microsoft’s extortion scheme and a month or two later other Microsoft mouthpieces chimed in with insults and predictions of doom. The Dan Lyons piece depended on twisting an Open Source study that had been cooked up after the leak. We know that Microsoft had previously discussed using patents as a weapon against free software, as early as 1998 when they were sabotaging power management, but it is possible that this leak precipitated the public phase of Microsoft’s public patent attack. It is equally possible that the leak was an inevitable and damaging part of the mess such a large, complex and dishonest effort. Surely Microsoft is now embarrassed by this later statements by Mike Anderer which states the exclusion goal in no uncertain terms:

    In a world where there are $500 million dollar patent infringement lawsuits imposed on OS companies … I do not think any company except a few of the largest companies can offer any reasonable insulation to their customers from these types of judgments. You would need a market cap of more than a couple billion to just survive in the OS space.

    Intellectual Ventures, with it’s pyramid scheme organization structure and marketing, is a natural cover for Microsoft’s schemes. They claim it’s all about respect and reward for inventors but we can see that it’s really about charging rents and exclusion of competition that rewards Microsoft and a few lawyers.

    There is more than enough evidence here for an anti-trust investigation.

    Dr. Roy Schestowitz Reply:

    Thanks for the link. I think the OSI Web site used to have a copy/mirror. I am not sure.

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