12.24.08

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Novell and Microsoft: All About Cooperation on (Intellectual) Monopoly

Posted in GNU/Linux, Microsoft, Novell, Patents, SLES/SLED at 3:36 pm by Dr. Roy Schestowitz

handshake black and white

THE OSI called it "Monopoly 2.0", whereas others call it a duopoly. Either way, the deal that Novell signed with Microsoft was intended to give power to Microsoft in exchange for ‘kickbacks’ (or financial benefits), cumulatively funneled into Novell in the form of SUSE coupons, which Microsoft outwardly calls “patent royalties”. This horrible deal is still mentioned in Novell’s annual report, the last of which was released yesterday. A summary of it can be found in MarketWatch or Yahoo and the full report is on EDGAR.

Along the way we also came across this older SEC filing, which shows very clearly that the Novell/Microsoft deal is all about patents (text below), not about so-called ‘interoperability’. The story Novell ‘sells’ to the public is very different from that which is must tell investors, simply because it’s the law. Recently, however, we revealed how Novell was working behind the scenes. The story told even to customers changed to include the “peace of mind” chorus. Ian Bruce and Roger Levy already do that [1, 2]. They sell fear because selling just a product was not good enough (Novell is down, Red Hat is up).

Anyway, from sec.org:

MICROSOFT – NOVELL
PATENT COOPERATION AGREEMENT

This patent cooperation agreement (“Agreement”) is effective as of November 2, 2006 (“Effective Date”) by and between Microsoft Corporation, a Washington corporation having a primary place of business at One Microsoft Way, Redmond, Washington, USA 98052, and Microsoft Corporation’s Subsidiary, Microsoft Licensing, GP, a Nevada General Partnership having its primary place of business at 61000 Neil Road, Reno, Nevada, USA 89511 (“MLGP”) (collectively, “Microsoft”), and Novell, Inc., a Delaware corporation having a primary place of business at 404 Wyman, Waltham, Massachusetts, USA 02451 (“Novell”). Microsoft and Novell are herein referred to separately as “a party” or collectively as “the parties” and when capitalized as “Party” or “Parties” also includes their respective Subsidiaries.

RECITALS

Microsoft Corporation is the owner of its Patents (as defined below); and has licensed the rights to commercially exploit its Patents to MLGP.

The Parties acknowledge the ownership or control of Patents and a desire to grant rights to each other’s Customers and make certain accommodations to each other under certain such Patents.

The Parties expect to continue research and development that will result in ownership or control of additional Patents and therefore desire to grant rights to each other’s Customers and make certain accommodations to the other Party under certain such additional Patents.

In consideration of the mutual covenants and conditions stated herein and for good and valuable consideration, the Parties agree as set forth herein.

The Novell/Microsoft deal was about software patents. It’s time to stop denying it and portray the deal for what it really is.

“The only patent that is valid is one which this Court has not been able to get its hands on.”

Supreme Court Justice Jackson

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3 Comments

  1. Shane Coyle said,

    December 24, 2008 at 4:09 pm

    Gravatar

    …and make certain accommodations to each other under certain such Patents.

    Yeah, like a license for all patents prior to the agreement (with the obligatory "certain exceptions") as they state more clearly in their 10-k filing:

    Under the Patent Cooperation Agreement, Microsoft agreed to covenant with our customers not to assert its patents against our customers for their use of our products and services for which we receive revenue directly or indirectly, with certain exceptions, while we agreed to covenant with Microsoft’s customers not to assert our patents against Microsoft’s customers for their use of Microsoft products and services for which Microsoft receives revenue directly or indirectly, with certain exceptions. In addition, we and Microsoft each irrevocably released the other party, and its customers, from any liability for patent infringement arising prior to November 2, 2006, with certain exceptions. Both we and Microsoft have payment obligations under the Patent Cooperation Agreement. Microsoft made an upfront net balancing payment to us of $108 million, and we are making ongoing payments to Microsoft totaling a minimum of $40 million over the five-year term of the agreement based on a percentage of our Open Platform Solutions and Open Enterprise Server revenues.

  2. Roy Schestowitz said,

    December 24, 2008 at 4:24 pm

    Gravatar

    The more SUSE people buy, the more Microsoft is paid for ‘infringements’ in Linux.

  3. Qatana said,

    December 28, 2008 at 2:27 pm

    Gravatar

    Hy everyone,,

    if you are more than 10 years in IT and Security, you know Novell is never was on top in it, Netware make servers more insecure, and help the attackers to easy find a corporate all connections, partnerships, phone no., payments etc…

    In the past, I’am so said when Novell ‘eat’ Suse,
    Inacceptable to cooperate Linux with Microsoft, because they will injecting every insecure technology in Linux, than they will said people : Linux is insecure too, Linux has viruses, Linux has Trojans and the peoples will see,,

    Opensource is not Buisness, it is help the humans to create the best technology in the world, and its free your mind! Microsoft is the spyware, i think!

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