Microsoft-esque and Microsoft-funded/inspired software (see Wiki pages on Mono and Moonlight) continues to fragment and separate the community of Free software users. Recently we saw hostility towards GNU in GNOME [1, 2, 3, 4, 5, 6, 7]. It came from the same guy who had started a banner meme to protest against Stallman’s stance on Mono.

Now that the Director of GNOME is a Novell Employee, there are those who believe that if Microsoft decided to buy Novell, it would have even more control over GNOME. From ECT (Linux Insider):

“I [imagine] Microsoft (Nasdaq: MSFT) is very pleased with this new direction with Gnome,” wrote Stumbles on Slashdot, for example. “I predict in 5 years, perhaps less, Microsoft will have maneuvered these short sighted individuals to accepting Microsoft to buy Gnome.”

Novell is increasing focus on Mono and its vice president has called developers to program for Microsoft's Silverlight (XAML). He once said that they could “refresh the look and feel of the entire desktop with Moonlight.” He seems to be ignoring the conditions under which access to Moonlight is granted.

Simon Phipps argues that “Microsoft desperately needs a clueful open source leader to fix this stuff.” Put in context:

There is still a strong thread of thought at Microsoft that imagines open source is purely the domain of solitary programmers of private means. This is yet another “covenant” from them that gives no assurance whatsoever to the average FOSS developer. Microsoft desperately needs a clueful open source leader to fix this stuff.

These are unacceptable conditions for Free software users. As one person put it:

Moonlight 2 sounds good but they still need the licensed codecs.

Bernard Swiss writes:

“Covenant” appears to be a marketing term that means:

“If you only do what we say we’ll let you do with our stuff, we think we’ll let you use it. For now, anyways. But we can still take it all back if we happen to change our mind.”

This isn’t a “covenant”; it’s an advert for a “free trial offer”.

Steve Stites agrees with Bernard, whose analogy is a valuable one.

derp sarcastically puts it liks this: “thank you for not suing me. MS decided not to persecute #moonlight users.” Later he wrote to me: “best part is that they can break the agreement any time they want. so nothing matters. except for de icaza”

eWEEK spoke to Novell’s de Icaza, who had interesting things to say (also here).

But de Icaza explained to eWEEK that this model was not so “open-source-y.” Yet, he assured readers that “Microsoft’s intention was to expand the reach of Silverlight, but the original covenant was not a good cultural fit.” And, “The new patent covenant ensures that other third-party distributions can distribute Moonlight without their users fearing … getting sued over patent infringement by Microsoft,” he said.

It is possible treat it like freeware, not Free software, but it’s even worse (and there is an expiry date to worry about). Watch this new article bearing the headline “Download New Moonlight For Free!”

They pretend it’s about price. But Microsoft's “promise” to Moonlight has at least 10 holes in it (some are seeing more). We wrote about it just before Christmas kicked in and Slashdot covered one aspect of it shortly afterwards (the part about MonoDevelop licensing).

rysiek writes “A few days ago, Miguel de Icaza wrote on his blog that the whole of MonoDevelop is now ‘free’ of GPL-licensed code. ‘MonoDevelop code is now LGPLv2 and MIT X11 licensed. We have removed all of the GPL code, allowing addins to use Apache, MS-PL code as well as allowing proprietary add-ins to be used with MonoDevelop (like RemObject’s Oxygene).’”

Boycott Novell apparently brought this to light for more people to see. They begin to realise Novell's ambivalent approach when it comes to the GNU GPL. It’s an important wakeup call.

To say that Microsoft and Novell have a muddy history when it comes to open-source projects and the GPL would be an understatement. Things were looking up, with the release of the open-source implementation of Silverlight, Moonlight 2, last week, but today things took a turn for the worse: Novell has just cut all the open source code from MonoDevelop.

Despite warnings from the FSF, Novell continues to promote C# and servers too are being stuffed with it. Not good. From this week’s news:

Novell stacks Linux and Mono for mainframes

[..]

Novell doesn’t just want mainframe shops to put SLES 11 on their boxes and run Linux workloads, it wants them to take the commercially supported Mono clone of the .NET runtime environment and use that to move Windows workloads over to mainframe boxes. So Novell’s SUSE Linux Enterprise Consolidation Suite (SLECS) bundles roll Linux and Mono software together and provide a single support package for the stack.

Kicking Novell out of the mainframes would be a case of reducing Microsoft’s ammunition. Fred Williams writes about another area that Mono and Moonlight have reached:

Along with Mono, I see Ubuntu including this on the live CD as well. Microsoft writes such good software and has such excellent standards that we should all embrace whatever Microsoft wants. Besides they have never done anything that would harm any potential competitor.
So, people in charge of what gets included in Ubuntu, bring it on.

On the same subject:

Microsoft just doesn’t change. No matter what they say.

As always the best course is to avoid them. There is no longer any real need to use any of their technology. You may try to convince yourself otherwise, but you are just wasting your time. Rather, look forward and embrace the new world that is before you.

Jose_X adds:

Subject: And let’s not forget the Microsoft trolls..

Bill Gates and Nathan Myhrvold own companies that buy many patents. They are not bound by any Microsoft covenants. Both of these individuals serve their interests today by working to Microsoft’s benefit.

And note the covenant doesn’t apply to old versions. This pressures existing users to stay on the treadmill investing in Microsoft standards over and over to avoid patent problems from Microsoft.

Charles Hixson writes:

I’ve read the analyses of the most recent promise, and it’s not good enough. I don’t care how “nifty” people think this new software is, because with that license/promise I’m never going to even look at it.

P.S.: Miguel was, apparently, recently so proud of removing “all GPL components” from MonoDevelop. Makes me quite glad I removed the installation as soon as I noticed it…and all other mono components with it.

Neko Nata concludes with:

Maybe I should say “good riddance” to him… but that’s not ok.
What is better is that Miguel does what he wants and Linux folks do whatever they want. If that means parting ways, I see it as a good thing for both parties.
I really should say to Miguel “goodbye”. And “thanks for all the fish”.
What if Novell starts selling some kind of *BSD? Maybe they can start selling something without the Linux kernel?

That would be highly unlikely, but if Microsoft bought Novell, then it would at least become a possibility. Several other people brought this up in 2007. █

Summary: Novell’s development of Mono steps outside the sandbox defined by Microsoft’s Community Promise

AS WE noted 5 days ago, the Mono developers (of which there are not many) are making Sqlite easier for Microsoft to embrace and extend (if Microsoft ever wishes to do so). Miguel de Icaza is just one among several who rave about this and yesterday he wrote about C# 4 and Mono, confirming the worries that Microsoft’s useless Community Promise (MCP) will be rendered “not applicable” as .NET continues to evolve.

“This is why projects such as Banshee are also stepping in areas of .NET which the MCP simply does not cover.”In essence, Novell already knows that Microsoft’s MCP is limited to particular packages/components and versions of C#/.NET (and their Mono equivalents). Novell can totally ignore this because it has a special and exclusionary deal with Microsoft (regarding software patents, to be more specific). This is why projects such as Banshee are also stepping in areas of .NET which the MCP simply does not cover.

For the time being, Novell’s new release of Evolution seems unencumbered by Mono, but this changes as soon as Evolution is put inside distributions and gains plug-ins [1, 2, 3]. The same goes for Novell’s Go-OO, which happens to share the same “go-” prefix as “go-evolution” and “go-mono”. It is almost as though they are all part of the same dynasty.

As another new article puts, “Microsoft [is] wary of [the] Linux threat.” It does not give .NET away as a ‘gift’ — no more than the town of Troy enjoyed the gifting of a large wooden horse. █

“The patent danger to Mono comes from patents we know Microsoft has, on libraries which are outside the C# spec and thus not covered by any promise not to sue. In effect, Microsoft has designed in boobytraps for us.

“Indeed, every large program implements lots of ideas that are patented. Indeed, there’s no way to avoid this danger. But that’s no reason to put our head inside Microsoft’s jaws.”

–Richard Stallman

Summary: Microsoft releases — via CNET — information about its secret patent “projects”

WE HAVE BEEN AWARE for a couple of years now that Red Hat too was discussing patents with Microsoft but no deal was ever signed other than the recent virtualisation collaboration. It involves no patents at all. This issue is entirely off the table, so what came to fruition is inherently different.

Microsoft now boasts a sort of PR placement. This was seeded in CNET, which has just broken the news about Microsoft unleashing its story about patent deals and their secret history.

The story has a lot to do with Microsoft’s Marshall Phelps, who wrote a book on his patent strategy. He was not fired but instead he took some time aside to write this book, apparently. It’s a book on how to burn GNU/Linux, but it’s titled “burning the ships” — a phrase that Matt Asay recited very frequently (he said “boats” though, also in a separate context).

Here is an interesting portion of the new article:

The Novell deal, though, is the most interesting tale and the one to which Phelps and co-author David Kline go into the most detail. It began as “Project Summer”–an effort to get at least one major Linux vendor to sign a pact with Microsoft by the summer of 2004. It began with a well-regarded salesperson, Susan Hauser, being tapped to confidentially meet with customers and see how much support there was for some sort of Microsoft-Linux partnership.

The customers were game, Phelps and Kline write, but unwilling to become a party in the negotiations themselves. As the effort took longer than Microsoft wanted it became “project next summer,” the authors quip. The company met with Red Hat, starting in the fall of 2004, as part of “Project Bridge Builder,” though talks broke down after a year and a half. Just as those talks were collapsing, in June 2006, Microsoft Chief Operating Officer Kevin Turner got a call from Novell’s then-president, Ron Hovsepian. A few days after that, Brad Smith called Hovsepian back and a new effort, “Project Blue,” was born.

The sides first met face to face two weeks later at a Hyatt near the Chicago airport. That meeting took place amid a convention of female bodybuilders. Another meeting took place in September, this time at Microsoft’s outside counsel’s office–in the same conference room where several months earlier Microsoft had hammered out an agreement with Sun Microsystems.

“Given the challenges of coming together with Novell,” Smith says in the book, “I thought it made sense to meet in the same conference room… Plus, since the room had been lucky for us once before, I figured that couldn’t hurt either.”

Talks progressed, but had not reached a conclusion. Smith suggested the two sides set an October 31 deadline for reaching a deal. Novell agreed that the deal would be “done or dead by Halloween.” After the last-minute end-run around the GPL, the two sides got the deal done and announced it to the world on November 2, 2006.

Pamela Jones added (in reference to that last sentence): “So it was a deliberate end run around the GPL, with a Microsoft goal of getting paid for each copy of Linux sold — just like SCO — but thanks to GPLv3, it was an end run that led straight into a brick wall.”

The story about Red Hat agrees with something that we already knew, but Red Hat was given a lot of flak recently because of its attitude or at least its approach towards software patents [1, 2, 3, 4]. Heise offers a very detailed analysis that we recommend reading.

The disclosure that Red Hat have applied for a patent on what might strike some as an obscure corner of the software ecosystem has caused others to re-evaluate how open and collaborative Red Hat actually are. As the AMQP 1.0 standard entered into its final phase, a 2007 Red Hat patent application, the company now refers to as a “defensive” patent, on an obvious extension of AMQP, was automatically disclosed and caused quite stir. What is AMQP, why is it important, what has Red Hat done to cause a ruckus within the AMQP community, and what does it mean to open source in general.

Red Hat could probably do a lot more to help the fight against software patents in Europe because now is a crucial time.

WMGarrison has just told us that he had “been studying Red Hat’s position on software patents [...] basically, they seem to be in favour of software patents, against business methods, and mainly for interoperability protection.”

The summary of Garrison’s long article goes like this:

In this article we revisit the historical 2005 Software Patent Directive, the most heavily lobbied European law ever, and look at Red Hat’s public policy statements regarding this law. Our conclusion: Red Hat Instead, they endorsed the propaganda term “Computer Implemented Invention” and they lobbied for amendments that would legislate for, not against, software patents across Europe where the letter of the law still forbade them.

As we respect and very much value the opinion of the FFII, giving the benefit of the doubt to Red Hat would be hard in this case. Can Red Hat make a formal clarification about its stance on software parents? Uncertainty helps not at all and it’s beneficial neither to Red Hat nor to Free software; it’s beneficial to Microsoft. █

“[The EPO] can’t distinguish between hardware and software so the patents get issued anyway.”

–Marshall Phelps, Microsoft

W

e have been through this more than once before [1, 2]. Samsung was caught in the midst of a huge scandal and even its chairman was personally involved. He not only quit the company but he is now going to prison.

The ex-chairman of South Korean firm Samsung, Lee Kun-hee, has been found guilty of tax evasion in Seoul and given a three-year suspended jail term.

[...]

The charges followed a three-month investigation into alleged corruption at South Korea’s biggest conglomerate.

Lee, one of South Korea’s richest men, had headed Samsung for two decades before his resignation from the chairmanship in April.

Remember that Samsung signed a Linux-hostile deal under Kun-hee’s leadership.

A noteworthy thing is the similarity between Samsung’s business practices and those of Microsoft. For instance, information about Microsoft’s tax evasion you’ll find in [1, 2]. Lest we forget other mischiefs, including the recent crusade of corruption, all in the name of lock-in. There are some other questionably-criminal activities here and here. Windows Vista too is still blushing at the courtroom after collusions.

It almost seems as though there is more justice in Korea than in supposedly ‘more civilised’ parts of the world. Had justice prevailed in the west, governments would not handle Microsoft so submissively and cowardly. Then again, enforcement of the law typically boils down to political manipulation (or corruption). █

“Did you know that there are more than 34,750 registered lobbyists in Washington, D.C., for just 435 representatives and 100 senators? That’s 64 lobbyists for each congressperson.”

–CIO.com

Disclosure: My father traded with and distributed Samsung electronics almost exclusively for 20 years, so there hardly any bias against the company.

Tell me more about the settlement.

What was impactful and important about it was we not only protected ourselves and our customers, we protected all upstream and downstream use of the technology. A lot of times, not to pick on anyone in particular, but Novell in the Microsoft settlement didn’t protect all their upstream and downstream users. We’re not just protecting ourselves, we’re protecting everyone who uses that technology.

Are patent disputes a common problem for you?

It’s always one of the issues, how do you handle patents with open source, because of the necessity in open source to protect up and downstream. It’s a complex set of legal issues. We generally don’t run into it that much because open source is really good at working around patent issues. It doesn’t take up a lot of my time.

Red Hat seems to be tuned in to developers’ needs a lot more than Novell is, the latter being a mixed-source company [1, 2, 3, 4] with a non-Free (non-libre) mindset. As such, this self-serving attitude is only to be expected in the future. Remember:

“Our partnership with Microsoft continues to expand.”

–Ron Hovsepian, Novell CEO (2008)

If the following comparison is anything to go by, Novell is to Free software what Nokia is to open source.

SUSE used to be a solid and stalwart promotor of free and open source software. The commercial boxsets had the best and most extensive collection of manuals and tutorials in the field, showing it understood the need of new W2L migrators. For Novell it was good thinking to buy SUSE and use it to salvage it’s declining Netware business. Corporations are driven by other sentiments than the communities of developers, as the recent remarks of Nokia’s VP show. Corporations will enter into strategic partnerships to protect or expand their market share and thus the partnership between Microsoft and Novell does make sense. But I am also raising my eyebrows at the attempts spearheaded by Novell to port Microsoft-based technology (.Net and Silverlight) to Linux (Mono and Moonlight).

Speaking of Mono, Nokia’s gadgets and Microsoft sellouts, never forget Samsung + Microsoft, which we last mentioned yesterday. Samsung is one of the companies that pay Microsoft for Linux in its gadegsts. It’s better to avoid it. Mono is believed to be part of this deal [1, 2, 3], but there’s insufficient evidence. █

All Your Typos Are [sic] Belong to Us

VeriSign got criticised out of this planet for profiteering from typos. Now it get the nerve to get a software patent on it.

VeriSign wins patent for Internet typo redirection

[...]

If VeriSign tries to demand licensing fees from others, patent lawyers could claim that similar services existed before Verisign’s was patented. In fact, VeriSign had cited those pre-existing services in justifying Site Finder.

All Your Curve Balls Are [sic] Belong to Use

Will you have a look at this one? It relates to Bilski [1, 2, 3, 4].

So is a curve ball patentable? No one really seemed to want to answer Judge Bryson’s question, and when they did answer the question there was not a lot of intellectual honesty. The answer, of course, should be that a “curve ball” is not patentable because it is still a baseball. There has been no transformation of the baseball in a physical way, so there is nothing new and/or nonobvious.

Microsoft’s Crusade for Intellectual Monopoly

It’s always rather amusing to find articles which speak of “export” when referring to imaginary things that they try very hard to characterise as “property”. All it deserves to be called is a “monopoly”, which in this case applies not to a complex process or a physical product but to human thought — imagination even. The other day we mentioned and commented on Microsoft's latest patent deal. A day later, Microsoft lovers take their shot at it as well, seemingly trying to create some fear (just what Microsoft needs). Here comes CNET to market some more patent deals:

With Microsoft’s announcement of yet another patent cross-licensing deal this week, it would seem nearly everyone has a deal with Redmond.

CNET has just been acquired, but it also has some promotional arrangements with Microsoft and you must be careful when reading anything from Ina Fried because it’s filled with bias. The reporter is apparently (almost evidently) close to Steve Ballmer. Mary Jo Foley, by contrast, can’t get anywhere near him because she occasionally ‘dares’ to criticise Microsoft (she told me so). Microsoft plays ‘reward and punishment’ with journalists, thereby encouraging them to say positive things, i.e. have more of that existing Microsoft bias. It’s just something to bear in mind, making it a rule of thumb. If you thought that press control in Russia was bad…

Hypocrisy at its finest, yet again.

From Digital Majority

Gratitude goes to Benjamin who has accumulated some good new finds. Here we have what seems like software patent troll du jour.

# May 12

# Fotomedia Technologies LLC vs. American Greetings Corp. et al
# Fotomedia Technologies LLC vs. Fujifilm USA Inc. et al

Plaintiff Fotomedia has filed two separate complaints for patent infringement against 50 different defendants.

According to the original complaints, Fotomedia owns the rights to three patents:

U.S. Patent No. 6,018,774 for a Method and System for Creating Messages Including Image Formation, issued Jan. 25, 2000.

U.S. Patent No. 6,542,936 B1 for a System for Creating Messages Including Image Information, issued April 1, 2003.

U.S. Patent No. 6,871,231 B1 for a Role-Based Access to Image Metadata issued March 22, 2005.

The first complaint names two dozen defendants that offer photo sharing Web sites which the plaintiff alleges infringe the patents, including American Greetings, DotPhoto, Phanfare, PictureTrail, BetterPhoto.com, Kaboose, BubbleShare, Printroom, Scripps Networks, Photogra, Fotki and Zazzle.

Reading further you’ll also find continued attempts to change patent laws in Europe. Typically, reappointments play a role and Sarkozy comes to mind as an example [1, 2, 3, 4, 5, 6]. The OOXML scandal was filled with such examples, as was last mentioned yesterday. At the moment in fact, Microsoft appears to be playing a similar card in a proxy fight against Yahoo’s board. But anyway, watch this from the news: (our highlights are in red)

Despite the hard work put into reforming the intellectual property landscape during its presidency of the EU in the first half of this year, Slovenia has admitted there won’t be a breakthrough under its stewardship.

[...]

The only country to oppose this idea is Spain, which has fought hardest against plans to simplify the linguistic requirements of the patent system. The country argues that Spanish is a more important language than both French and German, two of the official languages of the European patent system (the other being English), because of its use in Latin America. It fears that if patents aren’t available in Spanish, then Spain will become an economic backwater.

Spain to the rescue?

But the arrival last month of a new Spanish minister in charge of science and innovation, molecular biologist Cristina Garmendia, gives reason to hope for a change in the Spanish position, Konteas said.

“The Spanish government seems ready to change the focus of the economy from tourism and construction towards innovation-led pursuits. They seem to be going in the right direction.”

Talk about ‘agents for change’. The term is typically used with a positive connotation, unlike “crusader”, which is more imperialistic.

Lastly, have another look at these recent moves in the UK [PDF]. It’s not news, but it’s summarised thusly:

The Intellectual Property Office has revised its guidance on claims relating to computer programs, reflecting the more permissive stance taken by the High Court in the recent Astron Clinica case. The High Court has made a further pro-patentee ruling, this time in the case of Symbian’s application for an improved method of accessing a dynamic link library.

As reported in our last technology update, the practice of the UK Intellectual Property Office (UKIPO) of flatly rejecting patent claims to computer program products has recently been overruled. The case law in the area, formulated in the 2006 Aerotel and Macrossan decisions (see our Internet & E-Commerce Update of November 2006) was clarified in January 2008 by the decision of the High Court in Astron Clinica & Ors (see coverage in our last Updated dated February 2008).

It is without doubt that the United States will relentlessly continue trying to ruin the European system until it’s ‘equally ruined’, which passes US disadvantage onto competing economies. To use the hypothetical analogy Peter Gutmann made up to explain DRM in Windows Vista, it’s like cutting off the legs or Olympic athletes and seeing who hobbles best on crutches. Still, better than having the Olympic games delivered via the DRM-crippled Silverblight/Silverbullet/Silverfish, right?

Need it be mentioned that Microsoft has many software patents on this technology? And if Mono’s patron and Microsoft partner Novell likes it, should everyone else accept it also? You ought to see the ‘warm’ welcome Moonlight receives at Digg (mind the comments in particular). █

“One Free Software Foundation-backed group–aptly called the End Software Patents Project–is using the [Bilski] case as a platform to argue that no form of software should ever qualify for a patent. Red Hat also argued that the “exclusionary objectives” of software patents conflict with the nature of the open-source system and open up coders to myriad legal hazards.”

–Court case could redefine business method, software patents

A reader has sent us a pointer to this new article from Glyn Moody at Linux Journal. The article described just what Microsoft intends to achieve using its deal with Novell and why many software developers get exploited in the process. It’s all self-explanatory really, but here is the ‘meat’ of the argument which speaks about Brad Smith’s explanation of the Novell deal (shades of OSBC again [1, 2, 3, 4, 5, 6, 7]):

…as well as all the respect and appreciation that Brad wanted to express, he also has an interesting explanation of Microsoft’s current world-view:

we believe in the importance of building a bridge that makes it possible for the different parts of our industry to work together. We believe it needs to be a bridge that respects the diversity of different business models. We believe in a bridge that is scalable, that is affordable, that is workable, and that doesn’t try to move people from one island over the bridge to another but let’s everybody do what they love to do and respects that.

Live and let live: what could be more reasonable?

But let’s listen to Brad again as he explains what that means in practical terms:

That is a hard bridge to build, and yet I will say I believe today more than ever that it is a bridge we need to build. And I very much value the work and the conversations we were able to have at Novell when we started to build that bridge in November of 2006.

Ah, Novell. And what lies at the heart of that joint bridge-building with Novell?

we believe that patents are best sorted out by industry leaders so that developers and customers don’t have to deal with these issues themselves. We as industry leaders should take it upon ourselves to sort these things out.

When we worked things out with Novell, we did it with an eye towards succeeding in ensuring that the developers who were creating the software for Novell would not have to worry about this set of things, nor would their customers.

So there we have it. You shouldn’t worry about those silly old software patents because Microsoft and Novell have sorted everything out for you: all you have to do is carry on coding.

Except that it’s not quite that simple. Microsoft’s vision of “live and let live” is predicated on its continuing use of software patents, and of the open source side letting Microsoft and Novell handle all the tiresome implications for open source. In effect, though, this amounts to recognising Microsoft’s patents, and accepting its “solutions” for the open source community. “Live and let live” turns out to be tantamount to accepting Microsoft’s right to file, own and use software patents, which, in its turn, means accepting they apply to the open source world.

This “live and let live” promise surely excludes all those whose wallet hasn’t the Microsoft strings attached to it? Although the author does not say this directly and explicitly, it seems evident that he condemns this deal and suggests that we continue to combat software patents. Here is how it’s summarised and concluded:

Above all, it will send a message to the company that the open source world is not falling for the old “embrace, extend and extinguish” trick, and that if Microsoft really wants collaborate, “live and let live” is simply not enough, because of the asymmetric bargain it implies. As a basic pre-condition of working together with open source, the company needs to accept free software’s absolute foundation – the ability to share all its code in any way and with anyone – and that, by definition, means no software patents whatsoever.

Microsoft will most likely hope to find comfort in precedence (Novell’s blessings), resting in its government-imposed monopolies, to use Richard Stallman's description of software patents.

Interestingly enough, going as much as a decade back, you can find a similar term being used to describe this, namely a “government-granted authority.” Whatever term gets used, it’s always interesting to associate it with the context, antitrust action in this case.

…the federal government of the United States of America has intervened in the free market by granting Microsoft a legal monopoly through the patent and copyright processes. On numerous occasions, agents of the U.S. Department of Justice — the same DOJ that right now is taking shots at Microsoft in the courtroom — has intervened to arrest and penalize businessmen who attempted to ignore the federally-created right known as intellectual property. This right is a federally-mandated fiction, not a process of the free market. Copyrights were not invented by business, but by the government, who grants them and enforces them as a form of federally-sponsored monopoly.

Since Microsoft’s economic and intellectual property derive directly from government-granted authority, it is only reasonable for governments to have the power to review and modify how the beneficiaries of their shared power use that authority. Antitrust is one means by which governments attempt to reel in some of the power they delegated to companies and individuals.

It is rather ironic that the same establishment that grants monopolies is also the only means for undoing and regulating them. It’s like asking a gun shop to enforce the law in a barbaric nation. Something more effective will be needed to encourage fair competition which serves the customer. As things stand, Novell and Microsoft override laws proactively, using deals and deeds. █

Matt Asay has just weighed in on this debate that was mentioned here before. It’s centered around the mixing of Free software and software patents. His post is long, he has many insightful things to share rant about and here is just a fragment.

Dual-licensing with patents: It’s bound to happen

[...]

The problem with this sort of distinction (which we and virtually every open-source company of which I’m familiar espouses, in terms of a “community” and “professional” version) is how easily patent protection could creep into the one but not the other. When the open-source world starts selling the same FUD that the proprietary world does we have lost.

I care far less about hybrid models that depend on a mixture of proprietary extensions and an open-source core, as MySQL is contemplating, than I do about hybrid models that are a blend of “open source and very risky!” and “proprietary and oh so safe!”. If we slip into this sort of a model, open source loses its potency. It loses its character. It loses its integrity.

The downstreaming problem which he speaks of is represented by Novell's Moonlight. Novell already steps further than this, e.g. by separating Mono into 'chunks' depending on Microsoft’s R(seanable)AND, which is only as unreasonable as it wants and needs it to be. If you wish to witness Microsoft’s mis-comprehension of ‘open source’ (or “open minus source”, i.e. open-source), then take a look at Ozzie’s remarks which we intentionally only alluded to earlier but never took seriously. The ‘news’ was so insignificant that it was hardly comment-worthy. Microsoft is still all “patents, patents, patents!”

The concessions Microsoft makes are merely a case of public image — saving face on the face of it. If you need another more contemporary glimpse at Microsoft’s attitude, get a load of this latest analysis from the 451 Group.

There was general agreement that large IT vendors, including software giants such as Google, Oracle and even Microsoft, all see a need for involvement in open source. What also emerged as a common theme during our panel was that no big vendor could afford not to be in open source in some way or another. Basically, it’s been competitive necessity and cost effectiveness that has led vendors to open source, and this helps explain why we see open source all over the place. There was also a recognition that we were not talking about what vendors might be doing or when they might be making moves around open source. We were talking about the things these vendors are doing today and where they are looking next to push the ideas and advantages of open source further.

As you know, Google and Oracle just adore Free software. Yes, they love using it. They love receiving updates. They love the fact that Red Hat builds a platform for them and in the case of Oracle, lots of support money can be extracted at the developers’ expense. What’s not to love when you’re a freeloader?

“Microsoft’s legacy assets (secret code) become increasingly redundant as equivalent and often superior Free software is made available…”As for Microsoft, it wishes to believe that open source as a whole will become yet another Windows ISV that brings profits to Microsoft. In many other cases, it’s a tad unfortunate to find how they turned Free software into just visibility of source code as a marketing distinguisher if not a self-serving ploy.

Microsoft’s legacy assets (secret code) become increasingly redundant as equivalent and often superior Free software is made available for download, use, and redistribution. Microsoft knows all of this. What can it brag about? Probably just piles of papers, fueled by the very same laws it aggressively lobbies for. It shapes market rules to suppress emerging threats, to hinder natural progression, sometimes perceived as “disruption”. In response, we, as Free software supporters, must protest to keep the law in tact or restore it to a state of sanity. Digital slavery and a modern-age feudal system is good for nobody.

Oh look! The press is buzzing about another Microsoft intellectual monopoly. Watch carefully what you do with your hands now.

Right and left mouse buttons are placed on the side in a thumb-accessible position, and the design is unobtrusive enough to allow for easy typing when it’s on. We’d love to get a hand-on with the mouse if it ever comes out. It looks great and the ability to surf the internet without keeping our hand close to the computer is very conducive to our leisure time activities.

The gist of it all: a combination of prior art fitted onto A4-sized white paper sheets. Can’t have too many of these though! Word on the street is that Microsoft has run out of paper, so it can’t let Linux know what it’s allegedly infringing on. █

“Most people who are familiar with patents know it’s not standard operating procedure to list the patents… The response of that would be administratively impossible to keep up with.”

–Jim Markwith, Microsoft patents attorney
(after saber-rattling against Linux)

Microsoft and Novell Announce Departure of OpenSUSE Project, Renewed Patent Strategy

Customers will continue to embrace SUSE Windows Enterprise; technical collaboration between Microsoft and Novell will expand Windows Vista distribution to create Windows 7

REDMOND, Wash., and WALTHAM, Mass. — Apr. 1, 2008 — Over one year after signing an agreement to exchange protection money and securing several kneecaps, Novell Inc. and Microsoft Corp. today announced that OpenSUSE developers had reached a state of unrest. As such, Microsoft and Novell decided to revise their strategic partnership and combine the best of two platforms’ intellectual property, protected by an extensive portfolio of valuable patents.

The two companies will continue to swap intellectual property (IP) and create Microsoft Windows 7, accompanied by a derivative release named SUSE Windows, ensuring that OpenSUSE developers, formerly of SuSE, can continue to develop GNU/Linux solutions with peace of mind. In addition, Novell and Microsoft announced an expansion of their strategic collaboration to create the Oligarchy Invention Network (OIN), whose purpose is to litigate — albeit by proxy — against disruptive technologies whose market cost is zero.

“This agreement has been about Novell’s shareholder since day one,” said Jam Jaffe, executive vile precedence at Novell. “Investors told us they wanted to indulge in the wealth that was built around Windows. Novell is also becoming the preferred patent troll for litigation strategies against companies which refuse to pay for imaginary property and unsubstantiated claims.”

Achievements to Date

Today Novell and Microsoft announced that 15 new customers, including SCO (Nasdaq: SCOX), have sought the services of the joint collaboration, whose potential in spreading fear is immense. “I have been looking for such opportunities for over 5 years,” said Darl McBride, whose expected departure was wrongly announced by the press in the month of February.

Novell concluded by assuring technical enthusiasts that their GNU/Linux* distribution will be stripped of most or all of Novell’s contributions to it, in order to avoid further legal damage and threat over frameworks such as Mono. “The hobbyists were not exactly what we needed at Novell anyway,” summarised Just in Stein at the press conference announcing this major development.

About Novell

Novell, Inc. (Nasdaq: NOVL) delivers infrastructure software for the Patent-happy Enterprise. Novell is a leader in desktop to data center operating systems based on Ballnux and the software required to secure and manage mixed IT environments. Novell helps customers around the world minimize cost, complexity and risk, allowing them to focus on innovation and growth. For more information, visit www.novell.com.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in bribery, extortion and blackmail that help people and businesses realize their full potential.

Novell and SUSE are registered trademarks of Novell Inc. in the United States and other countries.

* Linux is a registered trademark of Linus Torvalds.

Hint for the baffled: I wasn’t really hired by Microsoft a year ago today.

It was pointed out just over a week ago that Novell had become somewhat of a Microsoft advertiser. It does a lot of Microsoft's PR, albeit by proxy, which makes it even more effective and credible. Here is a fine new example of this:

Novell chief: We helped Microsoft be more open

[...]

Novell had been struggling financially and failing to make much ground against open-source rival Red Hat. The deal that the company signed with Microsoft, which cost Novell some $40m (£20m), to avoid Suse customers being sued, meant that the two companies would promote each others products. Since then, Novell has realised a significant amount of revenue from being Microsoft’s Linux provider of choice and saw its sales in this area rise by 65 percent in the last quarter.

The article’s inaccuracies make it a tad tedious. To point out a few bit worth correcting/clarifying:

• In reality, Microsoft simply uses Novell to be seen as more open.
• Ron works for a company which claims it does "mixed-source" now. It is by no means a spokesman for anything “open”. One should not confuse Novell with FOSS or OSS.
• Novell massages the figures to fake or embellish growth of its Linux revenue. It would be unwise to blindly quote Novell’s overinflated claims of 65 percent growth in the Linux business.
• Mutual marketing agreements are funny because Microsoft continues to attack GNU/Linux while Novell advertises Windows. In many ways, it’s a one-way relationship and, in a sense, one might say that Hovsepian is Ballmer’s abused wife, who tolerates this mistreatment for cash.
• As for avoiding customers from being sued, the question to ask is: by whom? Novell has already been sued by the patent troll called Acacia, which has several links to Microsoft. The likes of Nathan Myhrvold are also to be watched out for. The protection is pointless at best (foolish morelike because it acknowledges legitimacy of patents), especially if Microsoft can sue by proxy.

The press must stop drinking the Redmond/Waltham Kool-Aid. █

There has been much discussion in the free software community and in the press about the inadequacy of Microsoft’s Office Open XML (OOXML) as a standard, including good analysis of some of the shortcomings of Microsoft’s Open Specification Promise (OSP), a promise that is supposed to protect projects from patent risk. Nonetheless, following the close of the ISO-BRM meeting in Geneva, SFLC’s clients and colleagues have continued to express uncertainty as to whether the OSP would adequately apply to implementations licensed under the GNU General Public License (GPL). In response to these requests for clarification, we publicly conclude that the OSP provides no assurance to GPL developers and that it is unsafe to rely upon the OSP for any free software implementation, whether under the GPL or another free software license.

“The whole thing is orchestrated as to deceive as much as possible, earning Microsoft trust while promising the least possible.”Of course, by this stage (time of the response to the announcements), the press had already been ‘poisoned’ by various articles which praise Microsoft for ‘openness’ and fair play. This type of publicity stunt, which includes previous promises of a “big announcement” to come, are no coincidence. The whole thing is orchestrated as to deceive as much as possible, earning Microsoft trust while promising the least possible.

It becomes very clear that Microsoft, which would be in debt if it acquired Yahoo], resorts to the only weapon it has left and available — software patents. Only hours ago we showed how vile this whole arena of software suits had become. Here comes another brand-new report about Apple getting sued by a patent troll.

Apple sued over iTunes technology

[...]

Atlanta-based ZapMedia Services Inc. sued Apple in U.S. District Court for the Eastern District of Texas, accusing the Cupertino-based company of violating two ZapMedia patents.

It is time to step up and:

1. Fight software patents
2. Call Microsoft’s ‘promises’ what they are. They are patent poison pills.

Other urgent matters might be the eradication of time bombs Microsoft and Novell are happily planting while taking cover in an undergroud shelter (patent deal). For all it seems, Novell and Microsoft are working together against common rivals and this happens to include all Linux vendors other than Novell. How long before this jilted Microsoft partner (Novell’s own description of the relationship, as seen also here and elaborated on here) truly just becomes Microsoft’s ‘Linux department’? It’s already taking orders from Redmond. █

–Robert Scoble, former Microsoft evangelist

A few hours ago we mentioned de Icaza's very telling confession. He knows that Novell acted selfishly. He is also aware of the implications of using Mono (he knew this all along). One of our readers, Woods, had the following useful pointer to add.

Microsoft indemnifies Novell Moonlight users

[...]

“We should have stayed with the open source community,” de Icaza said but added: “That’s better than saying we might be infringing but we are going to stick it to the man… I think we’ve done as well as we could.”

Note the defeatism. Elsewhere on the Web, in PC Authority in fact, Microsoft’s Novell-style and Novell-inspired taxoperability program receives a closer look. For a change, a respectable publication does not blindly praise Microsoft for opening up. It acknowledges that a patent trap exists therein.

Microsoft’s patent pledge is perhaps more worrying. It has promised not to assert patent claims against developers working on open-source projects, but the cover does not apply to commercial distributors of those projects, so distributors like Red Hat are still very much at threat. In broader terms, it undermines one of the basic tenants of open-source — that the user can, within the licence requirements, do whatever they like with the software — since the user is only free from the threat of patent claims until they start charging money.

Ultimately, Microsoft’s sincerity is in question, with many speculating that its true motives remain hidden. If Microsoft is genuine, only consistent good deeds will counter its history and silence the critics.

Judging by the latest news, there is no consistency in good deeds. Either Microsoft back-stabbed de Icaza (exploited him) or he knowingly did what just brought him large sums of money (wealth triumphs freedom). █

Japanese consumer electronics makers Victor Co. of Japan and Funai Electric will jointly develop and supply LCD television sets, an industry source said on Tuesday.

Patent TrollTracker has been receiving a lot of attention recently (including hacking attempts) and s/he keeps good track of Acacia and other patent trolls in the United States. There’s little — albeit some — hope on the horizon.

On another note, Michael Martin has a post on the pending patent reform in the Senate. He explains why the proposed reforms could help solve the problem of patent thickets. He even backs off his earlier conclusion that damages apportionment may be disastrous for the emerging market for ideas.

In other patent news (via Digital Majority):

Business Standard: Infosys to increase patent filings

Infosys Technologies Limited, the country’s second largest IT company, expects patent filings to increase with its primary R&D centre, Software Engineering and Technology Labs (SETLabs), expanding the scope of research to new areas.

The patent Armageddon in telecommunications continues: Sprint sues for VoIP patent infringements

Sprint has also gone to court, claiming 15 infringements of their patented VoIP technology by several small providers, Nuvox Communications, BroadVOX Holdings, Big River Telephone and Paetec Communications.

What is the point of these mutual lawsuits (other than lawyers' welfare? Should there not be peace, or the system be trashed for encouraging nothing but mutual destruction? The small guys are being sued also: Sprint sues little guys over VoIP patents

Following up on its $80 million settlement from its Vonage lawsuit last year, Sprint is milking its 115 VoIP patents by suing NuVox Communications, Broadvox Holdings, Big River Telephone and Paetec Communications.

Welcome to the 21^st century — the age where own-able knowledge is so organic that everything and everyone can be sued. █

–Chairman Bill Gates (CEO at the time)

The previous post covered some of the latest news about software patents. More on this fiasco can be found here. We said we would return to the possible issues with the Mandriva-Turbolinux collaboration (Manbo), if there are any at all (we never suggested this. but Groklaw did).

Here is what Mandriva’s CEO had to say in response to those who are worried.

Our recent announcement concerning the creation of a joint lab with Turbolinux has generated some controversy. Even PJ, from Groklaw, a site we like very much at Mandriva, showed some concerns and signaled her intention to stop using our Distro.

He alleviates many of the doubts, which is reassuring. It gives a cozy feeling, but be sure to see Brian Proffitt’s skepticism, as well. He actually corresponded with Mandriva’s CEO.

I wrote back: “I’m trying to understand how logistically this will work. Is there some sort of ‘clean room’ in place to keep Mandriva developers from seeing any Turbolinux code that might fall under the alleged Microsoft patents or any code that Microsoft may have directly contributed to Turbolinux?”

“The 10 or so engineers working in Manbo Labs have no access to any of the Turbo technology that is not is the lab scope. And everything in that scope is GPL,” Banchilon replied.

Not content with explaining it just to me, Banchilon reiterated these technical aspects, with more detail, on the Mandriva blog today. Specifically, he indicated what the scope of Manbo Labs would be:

• The scope of work is about 100 low-level RPMs, all in GPL
• Product will be available for public release under GPL
• Development is public, made on our Cooker environment and associates the community

Is that enough to assuage the fears of the community? Hopefully so. I think the two companies need to help each other technically and it sounds as if Mandriva is taking care not to get involved in Microsoft’s shenanigans.

It’s a matter to trust. Mandriva has not compromised their values before, and I think that’s earned them the benefit of the doubt.

The Mandriva situation came about at roughly the same time as the JVC-Microsoft patent deal. They were announced almost simultaneously. Sadly enough, some other sources are still spreading doubt and create unnecessary drama. Microsoft’s Bink, for example, writes about Microsoft’s average of 250 patents per month:

However, the company [Microsoft] also begun a broad intellectual property licensing push several years ago, under which it licenses technology to many companies big and small. The company has signed a slew of patent cross licensing deals since then, the most recent being Tuesday’s deal with Japan’s JVC.

Trolling through filings can offer a glimpse of where a company is headed, but as with Apple’s closely watched patent filings, seeing something in a patent application is far from a guarantee of what will eventually ship.

What was more annoying is shrewdly-crafted disinformation/FUD from InformationWeek’s Paul McDougal, which resulted in headlines like this one: Microsoft profits from Linux again, easier than improving Windows Vista

While that may be true, the above statement is made in reference to the JVC deal, despite the fact that there is no evidence of Linux being involved. Over the line? Well, we looked at JVC before. Judge for yourselves and do not rely on fear mongers. █

–Marshall Phelps

“If seems unfortunate if we do this work and get our partners to do the work and the result is that Linux works great without having to do the work. Maybe there is no way Io avoid this problem but it does bother me. Maybe we can define the APIs so that they work well with NT and not the others even if they are open. Or maybe we could patent something related to this.”

–Bill Gates [PDF]

A somewhat notorious blogger from the Wall Street Journal (Ben Worthen) has taken a break from his endless Microsoft praises and turned his attention to IBM.

This isn’t necessarily a sign that innovation is slowing. The U.S. Patent and Trademark Office announced recently that it has a backlog of 1,112,517 patent applications. To put that number in perspective, the USPTO approved a total of 157,284 patents in 2007.

Now, that’s a lot. But wait! Look who is among the biggest customers.

Microsoft, which once was only a modest customer of the U.S. Patent and Trademark Office, has been one of its biggest customers in recent years.

If you have not read the quotes at the top of this post, you are advised to do so now.

The latest cross-licensing deal with JVC does not mention Linux. Paul McDougal is just trying to scare you at the moment, so you are encouraged not to listen to him. That’s just what InformationWeek does -- it spreads Linux FUD.

Let’s quickly look again at Microsoft’s plan for handling of Linux — its biggest of threats for about a decade:

1. Impose a tax on Linux distribution so that the price of Linux is elevated, Linux is made less attractive (hello, Windows) and Microsoft enjoys a revenue stream from products that it never developed.
2. Brag about patents and repeatedly claim that Linux infringes on a set of unspecified patents. This scares potential Linux takers who think about long-term “obligations”. It’s just another SCO, to put it in simple terms.
3. And then there are other factors to consider such as OOXML, Silverlight and other patent-protected technologies which Microsoft strives to make widespread and unavoidable.

The only way to combat Microsoft’s attempt to penalise or ‘illegalise’ Linux is to understand what it Microsoft trying to achieve and how so. █

Image from Wikimedia

Here is the full (yet surprisingly short) press release:

Microsoft, JVC Agree To Patent Cross-Licensing Pact

January 15, 2008: 08:23 PM EST

DOW JONES NEWSWIRES

Microsoft Corp. (MSFT) and Victor Company of Japan Ltd. agreed to a patent cross-licensing deal for the further development of each company’s current and future product lines.

Financial terms weren’t disclosed, but the parties said that Microsoft is receiving compensation from JVC.

Microsoft, a Redmond, Wash., software company, said the agreement strengthens the long-term collaborative relationship between the two companies.

Shares in Microsoft continued to slide after hours, recently trading down $ 1.09 after closing down 1.1%, or 39 cents, at $34 in active trading.

-Adam O. Manzor; 201-938-5400; AskNewswires@dowjones.com

Order free Annual Report for Microsoft Corporation

Visit http://djnewswires.ar.wilink.com/?link=MSFT or call 1-888-301-0513

  (END) Dow Jones Newswires
  01-15-08 2023ET
  Copyright (c) 2008 Dow Jones & Company, Inc.

Update: In case you require some context and further information, Paul Krill has it. If you try Web search queries of interest, you will probably fail to see much evidence that JVC builds products with Linux.

Update #2: A more comprehensive press release can be found here.

Update #3: A source that it not so credible adds: “Among other things, JVC uses Linux in its streaming video networking gear.”

”What we have observed in recent months is a disturbing pattern of Microsoft briberies.“Sometimes, no matter how strong an accusation may seem, you have to call something what it truly is. What we have observed in recent months is a disturbing pattern of Microsoft briberies. This includes Microsoft briberies in Nigeria, Microsoft’s use of money to influence media, Microsoft bribing bloggers for positive coverage, Microsoft money buying OOXML support from an apathetic industry, and the list goes on and on. It could go on forever if smaller incidents are covered as well.

Briberies aside, there is the long-going intimidation campaign as well, not to mention lawsuits by proxy. Those who still believe that Microsoft has changed it ways must be either blind or overly hopefully, or maybe it’s just that Microsoft knows better how to cover its tracks.

The following new article from Masuran talks about some of the key issues that we have covered in the past year.

FUD and bribes

But there are some clouds at the horizon, the patent ‘agreements’ Microsoft has forced on various Linux distributors being one of them. After Novell gave in, more companies gave in to the FUD spread by Microsoft. After Novell, both Xandros and Linspire have made deals with Microsoft regarding technical interoperability and legal protection. Fortunately, not all companies delivering Linux based solutions are giving in. Canonical, Red Hat, Mandriva and others continue to say no to Microsoft. It’s strange that even though Microsoft won’t give more information on the 235 patents that it believes Linux is violating.

Unfortunately it didn’t stay at spreading FUD, during the ISO approval process of Microsoft’s OOXML wanabee-standard, it became clear that there had been some unfair play by Microsoft. The entire chain of events is to long to list again here but you can read all about them here on masuran.org or the excellent no-ooxml website.

Regardless of all the Fear, Uncertainty and Doubt Microsoft tries to spread, regardless of the bribing of ISO committee members, 2008 will be good for us. We who love freedom and openness, we who like to share information, we who love technology, we’ll have it good.

Let’s end this post on Masuran’s optimistic note. █

Here is a quick rundown. The full report is about 130-pages long, excluding enclosures. We will comment on bits that stand out in this report and we shall begin with the following text:

Development of translators to improve interoperability between Microsoft Office and OpenOffice document formats; and

Although these translators are intended to work with OpenOffice.org, ODF is not “OpenOffice document formats”. it’s an international (ISO-approved) standard. This subtle mistake can be deceiving and be used against ODF, so Novell must be careful.

Additionally, during fiscal 2007, Novell and Microsoft announced a collaboration to deliver Moonlight^TM, a Silverlight-compatible framework-based technology for hosting Silverlight interactive applications on Linux. Silverlight is a cross-browser, cross-platform plug-in for delivering richer user experiences on the Web.

Mind the collaboration (Microsoft is formally involved), the trademark on Moonlight (probably owned by Novell), and total lack of attribution to GNU (this is consistent throughout the report),

Major Customers

No single customer accounted for more than 10% of our revenue in fiscal 2007, 2006, or 2005. During fiscal 2007, we received $355.6 million from Microsoft related to the Microsoft agreements discussed above, which is being recognized over future periods.

Why is Microsoft listed under this heading (“Major Customers”)?

Although we have a significant amount of deferred revenue recorded on our consolidated balance sheet, included in this report, the majority of this amount relates to maintenance and subscription contracts and the Microsoft agreement, which is recognized ratably over the related service periods, typically one to three years, and do not pertain to unshipped product.

There is a simpler way to put this. Microsoft’s cash infusion accounts for some of of the things that make up the majority of the amount in this annual report. It’s a noticeable potion, so you are advised to recall Novell's issue with the bank in Forgo. More on this later, when backdating gets mentioned.

Primary competitors for our Linux and platform services solutions include Microsoft and Red Hat.

Isn’t it funny that Novell has partnered with a “primary competitor”, according to its own definiton?

It proceeds:

The two companies also agreed to provide each other’s customers with patent coverage for their respective products.

Didn’t Novell state on numerous occasions that this was not a software patent deal? Ron Hovsepian, the company’s chief, insisted that it was all about interoperability.

It proceeds:

We will continue to be competitors of Microsoft, but it is our goal that through this set of agreements, Microsoft will serve as an important indirect source of channel sales for Novell’s Linux sales.

Talk about a fox watching the hen house.

Novell proceeds to talking (almost raving about) patents and intellectual monopolies, also known as “IPR”.

Copyright, Licenses, Patents, and Trademarks

We rely on copyright, patent, trade secret, and trademark law, as well as provisions in our license, distribution, and other agreements to protect our intellectual property rights. Our portfolio of patents, copyrights, and trademarks as a whole is material to our business but no individual piece of intellectual property is critical to our business. We have been issued what we consider to be valuable patents and have numerous other patents pending. No assurance can be given that the pending patents will be issued or, if issued, will provide protection for our competitive position. Notwithstanding our efforts to protect our intellectual property through contractual measures, unauthorized parties may still attempt to violate our intellectual property rights.

More brow-raising portions are included here (particularly the latter part):

In the event of an adverse result in any such litigation, we could be required to expend significant resources to develop non-infringing technology or to obtain licenses to the technology that was the subject of the litigation. There can be no assurance that we would be successful in such development or that any such licenses would be available.

In addition, the laws of certain countries in which our products are or may be developed, manufactured, or sold may not protect our products and intellectual property rights to the same extent as the laws of the U.S.

Novell later talks about legal issues.

It starts by discussing its backdating of options.

Between September and November of 2006, seven separate derivative complaints were filed in Massachusetts state and federal courts against us and many of our current and former officers and directors asserting various claims related to alleged options backdating.

Then comes Microsoft (see this letter of complaint to the US DoJ).

On November 12, 2004, we filed suit against Microsoft in the U.S. District Court, District of Utah. We are seeking treble and other damages under the Clayton Act, based on claims that Microsoft eliminated competition in the office productivity software market during the time that we owned the WordPerfect word-processing application and the Quattro Pro spreadsheet application. Among other claims, we allege that Microsoft withheld certain critical technical information about Windows from us, thereby impairing our ability to develop new versions of WordPerfect and other office productivity applications, and that Microsoft integrated certain technologies into Windows designed to exclude WordPerfect and other Novell applications from relevant markets. In addition, we allege that Microsoft used its monopoly power to prevent original equipment manufacturers from offering WordPerfect and other applications to customers. On June 10, 2005, Microsoft’s motion to dismiss the complaint was granted in part and denied in part. On September 2, 2005, Microsoft sought appellate review of the District Court’s denial of its motion. On October 15, 2007, the U.S. Fourth Circuit Court of Appeals affirmed the District Court’s ruling, thereby allowing Novell to proceed with the remaining claims against Microsoft. While there can be no assurance as to the ultimate disposition of the litigation, we do not believe that its resolution will have a material adverse effect on our financial position, results of operations or cash flows.

The remainder of this section covers SCO litigation, which is beyond the scope of this site and our sight.

Further down the report you’ll find this footnote:

In the first quarter of fiscal 2005, we recognized a gain of $447.6 million on a litigation settlement with Microsoft to settle potential anti-trust litigation.

Here is the bit about claimed Linux growth, which is apparently a case of cooking the books, confirmed by those in Novell who are responsible and involved.

Within our open platform solutions business unit segment, Linux and open source products remain an important growth business. During the year we established and expanded relationships with several strategic partners to increase the reach of both our server and desktop products. Revenue from our Linux platform products increased 69% year-over-year in fiscal 2007. The strength of our revenue growth was due in part to our agreement with Microsoft which was signed in November 2006.

There are further details about NetWare and identity management, but these segments are not explored here, mainly for brevity.

Further down:

Microsoft Agreements-related Revenue

On November 2, 2006, we entered into a Business Collaboration Agreement, a Technical Collaboration Agreement, and a Patent Cooperation Agreement with Microsoft Corporation that collectively are designed to build, market and support a series of new solutions to make Novell and Microsoft products work better together for customers. Each of the agreements is scheduled to expire on January 1, 2012.

Once again, Novell talks about “Patent Cooperation Agreement with Microsoft Corporation”. This does not align with Novell’s claims that this was not a patent deal. Its annual report simply contradicts this.

We’ve also just found out why no coupons were involved in the Xandros, Linspire, and Turobolinux patent deals. The report states:

Microsoft agreed that for three years following the initial date of the agreement it will not enter into an agreement with any other Linux distributor to encourage adoption of non-Novell Linux/Windows Server virtualization through a program substantially similar to the SLES subscription “certificate” distribution program.

Then comes the part which we mentioned the other day (the day this report was actually released). It talks about how Novell passes Microsoft ‘patent money’ based on its sales volume of Free software and GNU/Linux. It’s very discomforting indeed.

Mind the fact that Microsoft is covering the expenses of all this charade. That ought to explain those Windows-run Web sites which promote this deal.

The contractual expenditures by Microsoft, including the dedicated sales force of $34 million and the marketing funds of $60 million, do not obligate us to perform, and, therefore, do not have an accounting consequence to us.

Novell then talks about “goodwill” assets.

Long-lived Assets. Our long-lived assets include net fixed assets, long-term investments, goodwill, and other intangible assets. At October 31, 2007, our long-lived assets included $180.5 million of net fixed assets, $37.3 million of long-term investments, $404.6 million of goodwill, and $33.6 million of identifiable intangible assets.

After the deal with Microsoft, Novell truly ought to rethink its definition of “goodwill”. The deal was selfish, and even Novell admitted this.

In revenue breakdown, Novell adds the following (all solid numbers are worth omitting here, but they can be seen in the full report):

Revenue from our open platform solutions segment increased in fiscal 2007 compared to fiscal 2006 primarily due to increased Linux platform products revenue, which increased approximately 69% due to the impact of the Microsoft transaction. In addition, open platform-related services revenue increased approximately 81% in fiscal 2007 compared to fiscal 2006. Software licenses within the open platform solutions segment decreased as most of the revenue in this category is sold under subscriptions and upgrade protection contracts, which we classify as maintenance and subscriptions. Because much of the revenue we invoice is deferred and recognized over time, we consider invoicing, or bookings, to be a key indicator of current sales performance and future revenue performance. For Linux platform products, invoicing increased 200% in fiscal 2007 compared to fiscal 2006, including the impact of the Microsoft agreement.

Novell fails to mention the effect of coupons that are bound to run out. Additionally, as stated earlier, Novell might be changing the definition of “open platform solutions”, thereby putting revenues in buckets that give an illusion of growth in more critical areas (strategic shift to Linux and open source).

The effect of the Microsoft cash injection is only mentioned later on:

Deferred revenue

We have total deferred revenue of $767.7 million at October 31, 2007 compared to $427.0 million at October 31, 2006. Deferred revenue represents revenue that is expected to be recognized in future periods under maintenance contracts and subscriptions that are recognized ratably over the related service periods, typically one to three years. The increase in total deferred revenue of $340.7 million is primarily attributable to deferred revenue from the Microsoft agreements of approximately $307.8 million.

According to a recent report from Maureen O'Gara, this might be the reason for the SEC’s suspicion and consequent probe. In page 40:

Open platform solutions increased primarily due to higher related revenue and the related economies of scale, due in part to the impact of the Microsoft transaction.

Later on you can find some bits about the antitrust settlement:

Gain on settlement of potential litigation in fiscal 2005 related to an agreement with Microsoft to settle potential antitrust litigation related to our NetWare operating system in exchange for $536 million in cash. On November 18, 2004, we received $536 million in cash from Microsoft. The financial terms of the NetWare settlement agreement, net of related legal fees of $88 million, resulted in a pre-tax gain of approximately $447.6 million in the first quarter of fiscal 2005.

It then returns to Microsoft’s effect (looking at financial figures again):

Investment income includes income from short-term investments. Investment income for fiscal 2007 increased compared to fiscal 2006 due to higher interest rates and increased cash balances primarily due to $355.6 million of cash received from the Microsoft agreements.

[...]

Net cash provided by operating activities in fiscal 2007 included the receipt of $355.6 million in cash in connection with the November 2006 Microsoft agreements. Net cash provided by operating activities in fiscal 2005 included the receipt of $447.6 million in cash, net of legal fees, in connection with the November 2004 Microsoft settlement.

It is worth stressing that the Novell/Microsoft agreement lasts not 5 years, but 5 years and 2 months. This fact repeated a few times, including in page 67:

On November 2, 2006, we entered into a Business Collaboration Agreement, a Technical Collaboration Agreement, and a Patent Cooperation Agreement with Microsoft Corporation that collectively are designed to build, market and support a series of new solutions to make Novell and Microsoft products work better together for customers. Each of the agreements is scheduled to expire on January 1, 2012.

Notes about Novell payment of ‘patent tax’ to Microsoft are included in page 68:

We will recognize the revenue ratably over the respective subscription terms beginning upon customer activation, or for subscriptions which expire un-activated, if any, we will recognize revenue upon subscription expiration. Objective evidence of the fair value of elements within the Patent Cooperation Agreement and Technical Collaboration Agreement did not exist. As such, we combined the $108 million for the Patent Cooperation Agreement payment and amounts we will receive for the Technical Collaboration Agreement and are recognizing this revenue ratably over the contractual term of the agreements of 5 years. Our periodic payments to Microsoft will be recorded as a reduction of revenue.

Page 128 contains references to Microsoft-related exhibits. You can view the entire report here. █

It ought to be clear by now that Microsoft has become over-obsessed with Linux, and rightly so. Looking at internal Microsoft documents, it is clear that Microsoft wants Free software (including Linux) dead. We have provided links and text in the past in order to support this assertion. Even filings which are visible to stake holders have had Linux listed as a most major threat to Microsoft’s core business.

Microsoft takes no passive stance. It does not pursue further success only by improving its own products. It has already responded with SCO-esque action that involves intimidation, extortion (yes, they secretly charge money for mythical patents), and more.

”Money can change laws, make bigots, and change perceptions.“Since Microsoft is concerned about Linux and also acts intolerably towards its future existence as a free platform, it would only be natural to keep an eye on Microsoft. Not understanding what Microsoft intends to do to Linux and Free software is a case of being completely blind to one’s greatest threat. It is a case of exposing oneself. No company other than Microsoft has spent so much time and money fighting Linux (not even SCO).

In reality, not analysing the issues at hands, including the patent strategy, is the path to the destruction of Linux as we know it. Money can change laws, make bigots, and change perceptions. With the recent patent deals, for example, that money is already doing a lot of legwork, so to speak.

As far as mobile devices go (Linux has excellent presence and growth in that area), Microsoft hopes to 'tax' embedded Linux, probably per device unit sold. If Linux will ultimately reign this area, which it will, Microsoft can grab a share of revenue it is not entitled to receive. If the cost of embedded Linux becomes high due such ‘taxation’, Microsoft can suddenly bring more appeal to its Windows-based offerings. There is a good reason why Microsoft signed cross-licensing deals with 4 companies that produce Linux devices. Microsoft explicitly included Linux in the announcements. This changes perceptions and Microsoft sets precedence this way, without ever requiring to produce any evidence (list of patents, for starters). How overly dishonest and uncomplaining.

So, what is next? A patent deal with supercomputing companies? Linux virtually owns 91.8% of this market (assuming top-tier supercomputers are anything to judge by). Microsoft would love to change this using dirty tricks and unprecedented intervention (Novell’s deal was a seminal one).

Microsoft has become morbidly obsessed with Linux. If this relationship is reciprocal, then it is probably justified. █

The Linux kernel is clearly a piece of software that is not built to integrally operate with a particular device. To be more precise, it is not implemented to achieve a particular physical process. Several months ago in court proceedings, a Microsoft lawyer explicitly said that a device needs to be involved in order for a patent to be valid. That was Microsoft arguing that software patents as we know them should be considered invalid. This happened in a US court of law. Shane and I recorded this dialogged and had this mentioned before.

The following new article from The Register talks about arguments involving the British patent system. Let it be repeated that software patents are not valid in the UK and here is a more precise explanation.

“The UK IPO’s position is that only when the patented item and its software are combined, when you are dealing with the whole package, are they offered protection,” he told us.

This leads back to discussions about the most recent patent deal which involves embedded Linux. One discussion went on to asking whether the LG, Samsung, Fuji Xerox, and Kyocera Mit deals actually mean anything to Linux. Matt Asay, who started his OSS/Linux-oriented career when he worked at Lineo (embedded Linux), rebuts and clarifies.

I doubt Microsoft has been any more forthcoming in private about its patent claims than it has in public. I used to work for a large Japanese company (Mitsui & Co.). I also used to work for an embedded Linux vendor. Between the two roles I discovered that Japanese electronics companies use a lot of Linux and they’re also very conservative.

Mix the two together, with a finger-pointing, brash American FUD-meister like Microsoft, and you get a patent deal. I don’t think there’s much more to it than that.

Regardless, Linux had a strong toehold in embedded Linux before Microsoft even thought of being relevant there. If nothing else, I’m guessing any claims around embedded Linux would be swatted down on prior art (whether that’s from Linux or VxWorks, pSOS, etc.).

As further evidence and information about this consider:

• $3 Windows a threat to Linux?
• The Be Very Afraid Tour and a Word About that Patent Study
• Microsoft needs to lay off the Linux FUD
• FSF Says GPLv3 Means Microsoft Patent Protection for All

That last item is very interesting in retrospect, due to FSF/Microsoft disagreement that soon followed.

In the following new video, Eben Moglen says more about the GPLv3, but he also talks about software, hardware, and patents.

I just got a note from Joe Latone of IBM Research that brought the happy news that the video of Eben Moglen’s talk Copyleft Capitalism, GPLv3 and the Future of Software Innovation, given at at IBM Research on October 29, 2007, is now available online

Embedded stream below, if you have Adobe Flash (link for gnash users is provided above).