Bonum Certa Men Certa

Microsoft-run Patent Cartel Retreats Following Formal Complaint, But Why? (Updated)

Fire door



Summary: Microsoft et al. head for the door just shortly after OSI files a complaint to the German Federal Cartel Office

TECHRIGHTS wishes to begin with the good news. Those patents which Novell was going to hand over to Microsoft? Well, that ain't gonna happen on the face of it. And with AttachMSFT [sic] still looking for a loan with which to buy Novell (more on that in a later post), the whole Novell acquisition is now in jeopardy, shareholder lawsuits notwithstanding.



Here is just one article about the latest regarding CPTN:

A plan created by Microsoft, Apple, Oracle, and EMC to create a consortium to acquire hundreds of Novell patents has been withdrawn after complaints from open source advocates, leaving the fate of the nearly half billion dollars' worth of patents uncertain.

It was first revealed in mid December that the four companies had set up CPTN Holdings LLC to jointly acquire 882 Novell patents for $442 million.

The rest of Novell was to be sold to Attachmate for $2.2 billion, with that sale being "conditioned upon the closing of the proposed sale of certain intellectual property assets to CPTN Holdings LLC." according to the original Novell press release about the acquisiton.


There were precursors too. "This went almost unnoticed," wrote Carlo Piana about a week ago, "Novell-Attachmate HSR filing withdrawn, to be refiled today". To quote:

Regulatory Matters (page 73)

Under the HSR Act and the rules and regulations promulgated thereunder, certain transactions, including the merger, may not be consummated unless certain waiting period requirements have expired or been terminated. The HSR Act provides that each party must file a pre-merger notification with the Federal Trade Commission (“FTC”) and the Antitrust Division of the Department of Justice (“DOJ”). A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties’ filing of their respective HSR Act notification forms or the early termination of that waiting period.

The parties to the merger originally filed their respective notification and report forms pursuant to the HSR Act with the FTC and DOJ on December 1, 2010 and the initial 30-day waiting period would have expired on December 31, 2010. In order to provide the DOJ with additional time to review the information submitted by the parties, Attachmate is voluntarily withdrawing its HSR Act notification form, effective December 31, 2010 and intends to re-file for the same transaction on or about January 3, 2011. The effect of this re-filing will also be to extend the waiting period under the HSR Act to a date 30 days from the date of the re-filing, unless earlier terminated or extended by the DOJ requesting additional information from the parties.

The merger was also subject to review and approval by the FCO. Attachmate, with the consent of Novell, filed the appropriate notification in Germany, and the FCO granted clearance to the merger transaction on December 23, 2010 stating that it will not oppose the merger transaction.

Under the HSR Act, the patent sale also may not be completed until the expiration of a 30-calendar-day waiting period following the filing by the parties to that transaction of their respective HSR Act notification


For those to whom the whole thing is news, see the previous post about the complaint in Germany or about CPTN in general. It's almost as though the FTC is too corrupted from the inside, so they need to go to Europe for help investigating this. Here is the original complaint [PDF].

“But why were the involved parties' minds suddenly changed?”As O'Reilly Radar put it the other day, this could become another SCO-like trouble. To quote: "As someone who has 10 shares of SCO framed and displayed in his bathroom, 2010 looked to be a very good year. The Beast from Utah finally exhausted all of its legal options, and cratered into a messy bankruptcy, leaving Novell with clear ownership of the Unix intellectual property that Linux may or may not incorporate. We all rejoiced, assuming that Linux would enjoy a happy existence in the future, unworried by fears of corporate protection rackets trying to intimidate people into paying for the free OS.

"Then this fall, Novell announced that it was selling more than 800 of their patents to a consortium that includes Microsoft as a major player. Suddenly, all of the angst about IP attacks against Linux were back on the table, but now with known Linux-hater Microsoft appearing to hold the reins. Will further legal hijinks ensue? Only time will tell."

Apparently not, assuming the latest news will stick and eventually become a confirmed reality. But why were the involved parties' minds suddenly changed? Our reader Satipera noticed that a software patents' crass booster, Patent WatchTroll, weighs in on the subject by writing that "The Meaning of “Open Source”: Patented by Microsoft". Frankly, the headline alone is so inane that it seems automatically- or stochastically-generated and Satipera seems to agree. He simply calls this "Completely clueless." To give just a flavour of this mind dropping:

Apparently, Novell was committed to open source and that makes it acceptable to the OSI that they owned patents, but the fact that patents might be used for a competitive advantage by a patent owner, and used to stop infringers from infringing is troubling. So troubling that they are urging the German government to investigate. See Open source campaigners urge investigation of Novell patent sale and Novell’s Microsoft patent sale referred to regulators. So it seems that the position of the OSI is that those who are anti-software patent and committed to open source are the only ones who can own patents without necessitating an investigation by the government. Breathtakingly self-serving if you ask me.

In any event, wouldn’t it be ironic if the movement developed at least in part to prevent monopolization of the software industry in Redmond wound up being responsible for handing Microsoft rights to every program ever created? Perhaps it is Microsoft that is behind the open source movement. Who knows, but several things seem abundantly clear, namely that nothing in life is every truly free, and the true meaning of the term “open source” may be “patented by Microsoft.”


On the contrary, Brian Proffitt came up with an accurate analysis which on January seventh scrutinised what Microsoft was doing:

For the record, I'm not terribly happy about the patent purchase agreement that's running in parallel to the Novell-Attachmate acquisition deal. The thought of 882 Novell patents getting sold to CPTN Holdings, LLC (a holding consortium made up of Apple, EMC, Microsoft, and Oracle America) does not sit well with me.

Now, also for the record, a source inside one of these four companies told All Things Digital's John Paczkowski "'We get to buy in at a cheap price and get a license to a very valuable portfolio... It's cheap defensive insurance.'"

I'm sure.

It is, like anything else in the world, possible that this is the reason behind the patent grab. If these are covering technologies that affect networking and cloud computing, areas that everyone and their sister are trying to get into, then a defensive stance makes sense.

But even if these patents have no direct correlation to open source, do you think the CPTN members will really miss a chance to spread some FUD if it suits them to? After all, in 2004, Steve Ballmer made the claim Linux violated 228 Microsoft patents, a claim that was revised upwards to 235 in 2007. Who will lay odds that in late 2011, if this patent purchase agreement goes through, that number will change to, say, 1117 patents?


Alex Handy argued that "Fall was a bad season for Linux" partly because of this news about CPTN:

The Novell deal sends 882 of its patents to CPTN Holdings in exchange for US$450 million. Microsoft expressed pleasure at bringing Novell technology in-house, but declined to comment further on its intentions for these patents.

Meanwhile, in October, Red Hat was back in US District Court, Eastern District of Texas with Acacia Research over litigation relating to Acacia's patents on systems and methods for exchanging data and commands between an object-oriented system and a relational system. While such patents could be used to take down almost every database-backed applications ever created, Red Hat decided to settle with Acacia for an undisclosed sum.


On the face of it, people may just forget this whole thing ever happened, but Novell's buyer too might walk away. Wouldn't that be memorable? We choose to believe that there was maybe a conspiracy to hide -- something malicious which had Microsoft retreat before further revelations could be made. Microsoft must not have expected formal (perhaps federal) complains to be made, later to unravel more participants in what had the word "cartel" come up. We wrote about this last month and so did many American news sites [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17], British news sites, and even former Novell employees like Zonker who argued: "According to the letter, "the proposed CPTN transaction represents a potentially new, and unprecedented threat against open source software." I'd go farther than that, though. The CPTN transaction is a threat against competition in larger marketplace, period. Yes, open source is in danger — but pretty much any legitimate competition in the areas of operating systems, virtualization, cloud computing, middleware, etc. I'm sure Red Hat feels uneasy about this unholy alliance, but then again so do Google and Parallels. Of course, OSI is only responsible for speaking up for the open source community, not the entire computing industry."

“On the face of it, people may just forget this whole thing ever happened, but Novell's buyer too might walk away.”Despite being a former Novell employee, he wishes this will fail. Zonker can be commended for not being loyal to Novell to the point of self-imposed blindness. Further he says: "There's still time before the deal closes, though. Here's hoping that OSI's voice is heard, and that it's not alone. Many companies and communities stand to be affected. There's no reason to stand by silently and let Apple, EMC, Microsoft, and Oracle increase their collective patent warchests without any scrutiny whatsoever."

Zonker's colleague wrote:

Indeed, the number and significance of Novell's open source patents call for scrutiny of CPTN from regulators. Novell is nearly as old as the personal computer, and when CPTN's newly acquired patents came to light, we, along with other open source observers, expressed concern about a Microsoft-led consortium inheriting hundreds of them.


Simon Phipps (OSI), who took part in this complaint, published a blog post about it and separately he wrote: "I've had a steady stream of investment analysts asking me for private advice on the Novell/CPTN deal. No others, just them. Not giving it." From his blog post we have:

I'm a member of the OSI Board, who were all involved in the drafting process. This is a significant new step for OSI, who have not previously referred a matter to competition authorities. It reflects the changing emphasis for the organisation, shifting from a role focussed almost exclusively on approving licenses to a more general role representing the interests of the open source movement.

Taking positions on important issues internationally is a valuable counter-balance to the influence of computer industry trade associations, and I hope OSi will keep doing it. That's one of the reasons we're shifting to a representative governance - a process which just progressed to the next step in the volunteer Governance Commitee, and which I hope will be completed before mid-2011.


Phipps also appears in some comments on the original post announcing this complaint.

In relation to the CPTN announcement, Groklaw admits its mistake (where Techrights got it right). To quote some relevant parts of the article "OSI Asks German FCO to Look Into the Proposed Patent Deal & You Can Too":

Remember when Novell won in SCO v. Novell before the jury in Utah in March of this year, and they put out the statement pledging their loyalty to Linux and how they would protect it?
Novell is very pleased with the jury’s decision confirming Novell’s ownership of the Unix copyrights, which SCO had asserted to own in its attack on Linux. Novell remains committed to promoting Linux, including by defending Linux on the intellectual property front.

This decision is good news for Novell, for Linux, and for the open source community.
Like a dope, I believed them. Maybe you did too. Maybe your business relied on that promise and decided to use Linux as a result. Now what? If you get sued for patent infringement over those 882 patents Novell wants to sell to the Microsoft consortium, would you have a cause of action against Novell as a result of what OSI calls a "major disruption to the competitive landscape." Ask your lawyer. But if the German FCO is saying it welcomes comments from the public, why not tell them about it, particularly if you have a business that could be directly affected by this proposed patent deal, if this is how you feel?


In short, the good news is that the whole CPTN plot is self-nuking at this moment. The question which remains to be answered is, did the complaint from the OSI play a role in derailing this part of the Novell deal? If so, there was probably something rogue to hide.

Update: it is now being reported that the CPTN arrangement ought to be still on, despite reports like this one.

Comments

Recent Techrights' Posts

What is "MATA"?
Think of it as GAFAM or "Meta"
WebProNews is a Slopfarm
Please avoid linking to WebProNews
Another "Told You So!": XBox Mass Layoffs at Microsoft (Many Recent Reports Were Chaff and Spin), Many Other Divisions Affected
With mass layoffs at Microsoft the world would be much better
When the Microsoft Aggressors Rely on Several Law Firms ('Attack Dogs', 'Guns for Hire'), Not Just One, Lawyering Up Against Techrights (Acting on Behalf of Americans Against UK Publishers)
From serving customers at some restaurant he has moved on to bullying people with demand letters
 
Brian Fagioli Created Another Slopfarm Targeting "Linux" After BetaNews Became a Slopfarm of Phantom Accounts and Pseudonyms
Mr. Fagioli even had slop about a dead Torvalds (hypothetical) as clickbait
Wayland is Perfect, Nobody Can Escape Its Perfection! (Or Not)
Do not form on opinion on Wayland based on politics
Moral Duty for "Linux Sites" to Speak Out Against LLM Slop
My wife has long complained about "Linux bloggers" keeping quiet and thus passive about a growing problem: slop
In Recent Hours Google News Promoted at Least 3 Slopfarms That Relayed Linux Foundation Propaganda Made by Bots or LLM "Bullshit Generators" (as Dr. Stallman Dubbed Them)
Google is circling down the drain and Google News too is hopeless
Linux Journal is a Slopfarm, It's Experimenting With LLM 'Authors'
Is Slashdot next?
Microsoft LinkedIn is Dying and Many More Layoffs Are on the Way
LinkedIn is just a failed acquisition of Microsoft. It causes losses and debt.
Gemini Links 25/06/2025: Combinatorial Music and Self Hosting
Links for the day
Richard Stallman Coming Back to Europe This Autumn to Give More Talks
His last talk in Europe attracted about 400-450 people
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Tuesday, June 24, 2025
IRC logs for Tuesday, June 24, 2025
Social Control Media, Technology & Catholicism: Synod on Synodality review and feedback
Reprinted with permission from Daniel Pocock
How Many More Women Will Managers at Microsoft Strangle and Tell to Kill Themselves (or Try to Kill)?
The world needs to know what happened
The New BetaNews: 7 New 'Articles', All of Them LLM Slop
BetaNews is basically defunct. Nobody writes there anymore.
statCounter Estimates Only 1 in 300 Iranians Would Use Microsoft for Search
Iranians don't quite trust Microsoft
Gemini Links 24/06/2025: ftpd on FreeBSD and Online Small Web Magazine
Links for the day
Google News Does Great Harm by Promoting Slopfarms as Legitimate News Sites
Slopfarms are sites which are 100% LLM slop
Links 24/06/2025: Trouble at "Open" "AI" and ‘Siarhei is Free’
Links for the day
Gemini Links 24/06/2025: Stimulants and Subscription Costs for DRM
Links for the day
Links 24/06/2025: OpenAI [sic] May Soon Die (Too Much Debt) and Social Control Media Accused of Being Misinformation/Disinformation/Propaganda Amplifier
Links for the day
Nirbheek Chauhan in Planet GNOME Explains Why Wayland Pushers Are Losing
"A strange game. The only winning move is not to play."
Polygamy, from Catholic Synod on Synodality to Social Control Media & Debian CyberPolygamy
Reprinted with permission from Daniel Pocock
Only a Third of or 1 in 3 Web-Connected Devices is a Desktop or Laptop, According to statCounter
we can expect Android to widen its lead
The Days Are Getting Shorter, the First Half of 2025 is Almost Over
We're gratified to see significant increase in traffic and also positive feedback on the work we do
Turning GNU/Linux Into a Political Football
X (not the site) is Free software
X Server Still Works for Many People
A lot of people will grow suspicious of Wayland boosters/pushers if they persist and insist on using these tactics
Exactly a Week Ago "BetaNews Staff" Said "Betanews Is Growing Alongside You". Since Then Every Article (All by "Camila Nogueira") Has Been LLM Slop.
BetaNews is basically a slopfarm
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Monday, June 23, 2025
IRC logs for Monday, June 23, 2025
The "Tarzan Effect" in Compilers and Software
What happens when you forcibly make things 'work', either by hacks or by disregarding warnings (like those that compilers tend to issue)?
Gemini Links 23/06/2025: Mass Tourism, Hair Love, and Google Gemini as a Googlebomb
Links for the day
Law Firm Burgess Mee Does Not Fully Deny Participating in Abusive Litigation for Serial Strangler From Microsoft
I am not unfamiliar with these tactics
The Modus Operandi of Wayland Pushers: Make It Political
do what I say or you're a nazi...
Links 23/06/2025: RFE/RL Contributor Vladyslav Yesypenko Released, Recording Industry Cutbacks
Links for the day
Brett Wilson LLP Solicitors (M): Over 99.9% of Our E-mail is Self-Marketing, We Send You 3.5MB E-mails for Less Than 1KB of Text
Why would tech people entrust legal matters to such people?
Peter Moon's (Computerworld) Interview With Richard Stallman
Stallman: If you want freedom don't follow Linus Torvalds
At What Point Does Outsourcing Constitute Malpractice?
Brett Wilson LLP's new staff page is misleading
United Arab Emirates (UAE) Sailing to GNU/Linux, According to statCounter
countries in that region will quickly learn the price of neglecting digital sovereignty
From Do Your Own Research to Do Your Own Search
The Web is full of garbage; search engines amplify this garbage
More People Moving to Geminispace?
at age 6+ Gemini Protocol seems to have gained some maturity and it seems like more people use it
Permutation in LLMs Does, Inevitably, Change Meanings and Therefore LLMs Cannot Properly Rephrase or Summarise Texts
LLMs lack actual grasp or comprehension of what they spew out
Links 23/06/2025: Many Security Breaches, Population Declines
Links for the day
Gemini Links 23/06/2025: "America at the Crossroads" and OpenWRT Surgery
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Sunday, June 22, 2025
IRC logs for Sunday, June 22, 2025
Pure Dove
Different means different, and sometimes those who "deviate" from "the norm" have a point
Censorship is a Sign of Weakness Which Invites More Censorship Attempts
revolutionaries don't succumb to pressure from bullies
Why It's Unlikely That LLM Slop Will Dominate the Web in the Long Run
Slopfarms will eventually perish (they have no actual value) and "survivors" on the Web will be sites that never depended on search engines and social control media
GNU/Linux in Argentina Now Measured Near 5%
Like in central Europe, they must be seeing an increasingly hostile US
BetaNews is Fake News, Composed by LLM Slop
nothing in BetaNews is written by humans anymore