Novell Goes Public with MS Patent Agreement Documents

After a delay due to a stock option investigation, Novell has just filed its 10K. The filing includes, as attachments, documents from the recent Microsoft deal:

The text of the 144-page 10-K filing does not get into the specifics of the Microsoft deal, but it does include, subject to some redactions, the full three Microsoft agreement documents: the second amended and restated technical collaboration agreement, the first amended and restated business collaboration agreement and the patent cooperation agreement.

One of the most notable things about the report, according to Pamela Jones’ Groklaw Web site, is that it explains that Microsoft may be forced to stop distributing SUSE Linux coupons if the current text of the third draft of the GNU GPL (General Public License) 3 is included in the final license.

“If the final version of GPLv3 contains terms or conditions that interfere with our agreement with Microsoft or our ability to distribute GPLv3 code, Microsoft may cease to distribute SUSE Linux coupons in order to avoid the extension of its patent covenants to a broader range of GPLv3 software recipients, we may need to modify our relationship with Microsoft under less advantageous terms than our current agreement, or we may be restricted in our ability to include GPLv3 code in our products, any of which could adversely affect our business and our operating results,” the Novell filing said.

“In such a case, we would likely explore alternatives to remedy the conflict, but there is no assurance that we would be successful in these efforts,” the filing said.

That may explain why Microsoft has gone on the offensive about the GPLv3 during the past few weeks, claiming that free and open-source software infringes on 235 of its patents and directing its ire at the upcoming open-source license.

Keep in mind that the attachments do have redactions, which is standard operating procedure for releases like this. More details can be found on Groklaw.


Novell, EFF Announce Patent Reform Partnership

We were all quick to deride Novell when we perceived they did something that was not in the best interest of the community. I think it’s only fair that we point out when they do something that should be perceived as good for the community. I think they just have:

With all the controversy about software patents in the Linux technology space of late, it may come as a surprise to some people that one Linux company has today announced they will take unprecedented measures to assist the Electronic Frontier Foundation (EFF) in reforming the current patent system and eliminating bad software patents.

That company is Novell.

Novell made the announcement during a panel discussion at the Open Source Business Conference entitled “Is the Novell-Microsoft Deal Good for Open Source?”–a panel which included Novell’s Director of Marketing Justin Steinman and Sam Ramji, Director, Linux Labs, of Microsoft.

“EFF is partnering with Novell to try to get rid of software patents that are hurting innovation all over the world,” stated Shari Steele, Executive Director of the EFF in an interview prior to the panel session.

In essence, Novell is committed to working with the EFF to improve patent quality, while at the same time work to lobby with government agencies to reform existing patent policies and litigation, according to Nat Friedman. Novell’s Chief Technology and Strategy Officer for Open Source. Specifically, Novell will assist the EFF in two ways.

As previously mentioned, I was at that session and it was very interesting. There are two basic pieces to this agreement. The first is that they will work with and support the EFF’s existing Patent Busting Project, which targets existing patents that cover technology concepts that are perhaps too fundamental or already have prior art. The second piece will have Novell working with the EFF and legislators to lobby for patent reform, initially in the US, but also branching out to Europe, where patent problems continue to arise. The EFF and Novell will also work with standards groups to assist in patent reform. The EFF has confirmed that this is the first time a corporate entity has publicly thrown in this level of support for the EFF on the patent issue. Kudos to Novell. I’m surprised Nat didn’t play this up a bit more at OSBC (has was not on the panel for this session, but was in the crowd and was called upon by Justin to answer a question).

With the Microsoft-Novell deal slated to become public knowledge, with redactions, before the end of the month we will soon be able to put some if the previously missing puzzle together and see what implications there really are. One thing I think Novell has learned here is that increased transparency really would have eased this whole process. Let’s hope that’s not a lesson they soon forget.


Second Day OSBC Wrap up

The OSBC is now officially over and here’s my second day wrap up. The opening keynote consisted of Rob Curley, Marten Mickos and Lee Thompson. I had never seen Rob speak before, but he is extremely entertaining and had some very good information. He maintained that what him and his team were able to accomplish in Kansas would not have been possible without Open Source. Marten gave an update on where MySQL is and the variety of models he thinks can be successful in OSS. Lee gave a very good overview of how Open Source is being utilized at E*Trade. During the recent February market dip, they were one of the only brokers to not suffer performance problems. He attributed that to the use of Open Source directly.

How Big is the Exit? What is an Open Source Business Worth in 2007 and Beyond?
* There was a consensus that the public markets for Open Source companies are highly dependent on Red Hat. This is from a perspective that if Red Hat were to falter, the Open Source image would be sufficiently tarnished that other OSS companies would not receive new funding and valuations in general would suffer. I wrote about this a couple years ago. I think as time passes, this becomes less and less the case.
* Investors and VCs really seem to like to “subscription” model in OSS companies. I think it’s a very good model, but am less convinced it’s the one true path (one insinuated that OSS companies that tried something different were pretty much idiots for instance).
* With OSS you need to think about your customers with razor sharp focus. Find their pain points, solve their problems and you will be handsomely rewarded.

Is the Novell-Microsoft deal good for open source?
As you can imagine, this session was standing room only. Not hard to guess what the participants opinions were. LWN editor Jon – Bad. Novell rep Justin and Microsoft rep Sam – Good. The one surprise may have been Allison (if you don’t read her blog), who said it would probably be irrelevant. Some notes:
* Ballmer’s comments were definitely detrimental to the acceptance of the deal.
* If the deal would have been with someone else besides Microsoft, say IBM, it would barely have been news.
* Microsoft was the number one channel for SLES in Q1 2007.
* Microsoft has only gone on the offensive in patent litigation 2 times in its history. They are the defendant in about 30 cases or so in any one given point in time.
* Is Microsoft now a Linux distributor?
* AIG and BoA reps both seemed uninterested in the deal, saying it did not impact their buying decision.
* Would Microsoft consider joining the OIN?
* Customers are almost universally telling Microsoft that they want heterogeneous environments. 100%-anything seems to be a thing of the past

Community Development: Business Development for the 21st Century
* Open Source in a large way was started by disenfranchised developers
* For OSS companies, community management is about facilitation.
* Google lawyers actually have an SLA requirement for responding internally in some cases. Developers are that important.
* Many OSS communities are going from developers only to developers and users.
* The time and cost in fostering a community is easy to underestimate.

Overall a very good show, one in which I learned a good deal.

Note: For all these OSBC updates, items with * are not necessarily my opinions, just a summary of things that were said by various panelists.


"Is the Novell-Microsoft deal good for open source?" panel question

I’ll post a full overview of OSBC day two later, but the “Is the Novell-Microsoft deal good for open source?” panel went over time and I didn’t have a chance to ask the question I had. From the panel, Justin from Novell indicated that Microsoft was the number one channel for SLES in 2007 Q1. My question is: do you think having one of your major competitors (one who is much bigger than you no less, and has a track record with these things) be your number one channel is (1) sustainable (2) sane (3) almost an admission of failure in being able to effectively compete in the marketplace on your own.


Closing notes on the first day of OSBC

Overall I have to say I’ve really enjoyed the first day of OSBC. I’m getting an entirely different perspective on many things, which is good. It’s easy to get a bit insular when you are only exposed to a single side of an argument. After my last post, I noticed many more “community” members too, which is great. It’s amazing how often a few general themes have been brought up, even in sessions with widely disparate topics. A few notes from attended sessions:

What’s Next: Emerging Opportunities + Strategies
* It’s interesting that many Open Source projects do very little or no marketing, but have extremely powerful and well known brands. That’s one of the power of ubiquity.
* The value that can be derived from non-paying users should not be underestimated.
* Transparency, at all levels, is critical in an Open Source community. So is respecting user privacy and data.
* One reason cost per customer acquisition is less expensive is due to customer self-selection through quality experiences via gratis downloads.

A New Breed of P&L: The Open Source Business Financial Model
Larry gave an interesting look at the current state of Open Source software in relation to what he calls the golden age of software (mid80’s through late 90’s). His assertion is that things, such as the percentage of revenue spent on sales and marketing, have gotten way out of whack in the software industry. Open Source may be bringing us back to that golden age. Red Hat was one of his primary examples. More data will be available in the coming years, as the current crop of Open Source companies have a chance to mature.

Copyleft Business Models: Why it’s Good Not to Be Your Competitor’s Free Lunch
Eben is such a phenomenal speaker that I really can’t do this talk justice with a simple summary. However, here are some highlights:

* When he worked at IBM, software was a free lunch… used to sell hardware. Customers often submitted patches with their bug reports. For a variety of reasons this has changed in the current day and age, much to the determent of general software quality.
* An example of this is the comparison of how far hardware has comes since 1979. When IBM had 29G is took massive space and was very expensive. Now it takes up 2.5″ and is $40. Software on the other hand has almost become worse. He describes the situation as deplorable.
* An analogy for what the lack of standards can do. During the civil war, the north had a standard gauge for railroad ties. The south did not. This meant items often had to be unloaded just to be reloaded in the south. This became crippling and is an example of how much work can be wasted when there are no open and available standards.
* In his opinion, community adds a huge amount of value to a project, for a variety of reasons.
* The next draft of the GPLv3 should be Apache license compatible.
* With regard to the recent speculation about Microsoft, the GPLv3 and the fact that the Novell coupons do not expire; he can not say as much as he’d like, due to an NDA (one he thought would have expired by now, but hasn’t due to a Novell SEC filing delay). What he did say was that you need look no further than his actions and the actions of Microsoft to see what the Microsoft opinion on the matter is. He asserts they are quite concerned.

More to come tomorrow. Now to partake in the very nice spread that has been offered to all attendees.


Microsoft takes on the free world

Some thought it was inevitable, while other thought it would never happen. From a recent Fortune article:

Free software is great, and corporate America loves it. It’s often high-quality stuff that can be downloaded free off the Internet and then copied at will. It’s versatile – it can be customized to perform almost any large-scale computing task – and it’s blessedly crash-resistant.

A broad community of developers, from individuals to large companies like IBM, is constantly working to improve it and introduce new features. No wonder the business world has embraced it so enthusiastically: More than half the companies in the Fortune 500 are thought to be using the free operating system Linux in their data centers.

But now there’s a shadow hanging over Linux and other free software, and it’s being cast by Microsoft. The Redmond behemoth asserts that one reason free software is of such high quality is that it violates more than 200 of Microsoft’s patents. And as a mature company facing unfavorable market trends and fearsome competitors like Google, Microsoft is pulling no punches: It wants royalties. If the company gets its way, free software won’t be free anymore.

The conflict pits Microsoft and its dogged CEO, Steve Ballmer, against the “free world” – people who believe software is pure knowledge. The leader of that faction is Richard Matthew Stallman, a computer visionary with the look and the intransigence of an Old Testament prophet.

Then come the details:

Microsoft counters that it is a matter of principle. “We live in a world where we honor, and support the honoring of, intellectual property,” says Ballmer in an interview. FOSS patrons are going to have to “play by the same rules as the rest of the business,” he insists. “What’s fair is fair.”

Microsoft General Counsel Brad Smith and licensing chief Horacio Gutierrez sat down with Fortune recently to map out their strategy for getting FOSS users to pay royalties. Revealing the precise figure for the first time, they state that FOSS infringes on no fewer than 235 Microsoft patents.

The 235 number is fairly close to the previously given (and disputed) 228. While the lengthy article does get some minor details wrong, it’s a good way to get up to date on the situation if it’s not one you’ve been following. On to why Microsoft choose to do this now. It could be that they think the GPLv3 has teeth and are trying to get out ahead of its release. It could be that they’ve not been as effective as they thought they’d be at battling Open Source and Linux more directly. Regardless of the reason, I agree with Larry:

If Microsoft believes that Free and Open Source Software violates any of their patents, let them put those patents forward now, in the light of day, where we can all evaluate them on their merits. If not, then stop trying to bully customers into paying royalties to use Open Source. It’s time for Microsoft to put up or shut up.

(Tim put it nice and succinctly: Four Words for Microsoft: Litigate or shut up

It appears that the battle lines are being drawn and the cold war of software patent world may be coming to an end. The players involved here are huge and the amount of money astronomical. Who has the most to lose? I’d say Microsoft. How will this play out? We’ll all be watching closely, that’s for sure. One has to wonder how Novell feels about their recent deal right about now.


Novell confirms that patent deal gave it access to Microsoft IP

Matthew Aslett has some more information from Novell on the patent agreement with Microsoft. From the article:

Last week I noted that a new explanation had emerged as to why Novell entered into its patent agreement with Microsoft: because Novell engineers “required sanctioned access to Microsoft’s code in order to develop open source interoperability without violating MSFT’s IP.”

I asked Novell to confirm whether this was correct and received an interesting response from Justin Steinman, director of marketing for Linux and open platforms at Novell, in which he confirmed the explanation and stated that it was not new, but had been overlooked the press and community.

The statement from Steinman was as follows:

“Since we announced the Novell-Microsoft agreement in November, we’ve always said that the intellectual property agreement provided a foundation for the interoperability between Windows and SUSE Linux Enterprise. This foundation falls into two primary categories: 1) the “covenant not to sue,” which provides customers with peace of mind when they deploy SUSE Linux Enterprise; and 2) the IP access necessary for the technical collaboration to deliver interoperability between Windows and Linux. For better or worse, the community and press at-large have focused on #1, although Novell has talked about both categories since we signed the agreement.

“As you know, engineers at Novell and Microsoft are hard at work on our technical collaboration, and we demonstrated the first results at BrainShare in March. But in order to deliver the interoperability between Novell eDirectory and Microsoft Active Directory, as well as the bidirectional virtualization between Windows and SUSE Linux Enterprise, Novell required sanctioned access to Microsoft’s code in order to develop open source interoperability without violating Microsoft’s intellectual property.

OK, that sounds a little more reasonable than some of the previously given explanations. The perplexing part here is why this is all slowly coming out in bits. Given the initial community reaction, you’d think Novell would have been crystal clear of the reasons and benefits from day one. Their actions caused people (for the most part reasonably in my opinion, given the circumstances) to assume the worst. At this point a huge amount of damage has been done to Novell, not only from an image/trust point of view but also from a staffing/recruiting point of view. Both of these are absolutely critical in the commercial Open Source world. It will be interesting to see how they attempt to recover moving forward.


Torvalds 'pretty pleased' about new GPL 3 draft

The 3rd draft of the GPLv3 has been released, and it’s great to see that Linus is “pretty pleased” with it. Despite what same are saying, I think that Linus’ opinion on this matters quite a bit. He started one of the most successful GPL projects ever. Him rejecting the GPLv3 has the potential to create a huge fissure in the GPL landscape. From the article:

“I’m actually pretty pleased. Not because I think it’s perfect, but simply because I think it’s certainly a lot better than I really expected from the previous drafts,” he said. “Whether it’s actually a better license than the GPLv2, I’m still a bit skeptical, but at least it’s now ‘I’m skeptical’ rather than ‘Hell no!'”

In particular, one provision against digital rights management has been narrowed, and another that Torvalds feared could lead to multiple incompatible versions of the GPL has been removed or defanged.

“I’m much happier with many parts of it. I think much of it reads better, and some of the worst horrors have been removed entirely,” Torvalds said.

Torvalds was noncommittal about whether he might try to move the Linux kernel to GPL 3–a change that would require the permission not just of Torvalds but also of all other Linux kernel copyright holders. But he didn’t rule it out.

“The current draft makes me think it’s at least a possibility in theory, but whether it’s practical and worth it is a totally different thing,” he said. “Practically speaking, it would involve a lot of work to make sure everything relevant is GPLv3-compatible even if we decided that the GPL 3 is OK.”

I’ve not had a chance to look through the new draft thoroughly, but I’m not a lawyer anyway and my opinion on the subject hardly matters. The FSF had previously intimated that this new draft would prevent deals like the recent Novell Microsoft patent covenant. For it’s part, Novell seems to think this is not the case. From a Novell blog post:

Here’s Novell’s position on the new draft:

We will continue to distribute Linux. Nothing in this new draft of GPL3 inhibits Novell’s ability to include GPL3 technologies in SUSE Linux Enterprise, openSUSE, and other Novell open source offerings, now and in the future. This is good news for our customers.
We are firmly committed to continuing the partnership with Microsoft and, as we always have, fully complying with the terms of the licenses for the software that we ship, including software licensed under GPL3. If the final version of the GPL3 does potentially impact the agreement we have with Microsoft, we’ll address that with Microsoft.

A cursory glance would seem in indicate that the following clause is the addition made by the FSF:
Each contributor grants you a non-exclusive, worldwide, royalty-free patent license under the contributor’s essential patent claims in its contribution, to make, use, sell, offer for sale, import and otherwise run, modify and propagate the contribution.

I don’t know enough about legalese to suss out whether that would actually invalidate the MSFT-NOVL agreement, however it is extremely encouraging to see that things are heading in the right direction.


Enterprise Apps Header Red Hat Plans Linux Desktop Offering 'for the Masses'

Speaking of Linux on the Desktop, it looks like Red Hat is getting back into the Desktop Linux market. From the article:

Red Hat is planning a packaged Linux desktop solution that it hopes will push its Linux desktop offering to a far broader audience than exists for its current client solution.

“This will be a more comprehensive offering that will target markets like the small and medium-sized business [SMB] sector and emerging markets. Part of this strategy is to get the desktop more to the masses than our existing client is getting today. So there will be a different packaged solution for the masses coming down the pike,” he said.

Asked if part of the strategy is the mass consumer market, Cornier responded that Red Had has “no plans to go and sell this offering at Best Buy, if that’s what you mean by the mass consumer market. Customers will be able to download it and get a Red Hat Network subscription on the Web for it, which is what we feel is the distribution wave of the future anyway,” he said.

I’ve always thought Red Hat was missing an important part of the market by not offering a maintenance but no support option. That’s basically what RHL was. For my part, I still maintain that Fedora is not a viable option for the average Linux user. If you’re a developer it’s not bad (in fact I use it on both my main home desktop and my main work desktop), but the initial roll out was poor, the packaging paradigm keeps changing (I don’t mean at the RPM level, but at the Core+Extras flips that go on every couple version), the upgrades often break things and with Fedora Legacy gone the upgrade cycle is too fast for a non-enthusiast. I don’t mean this to mean that the project isn’t doing some absolutely awesome things as they are, it’s just that I think people try to do with Fedora things they shouldn’t (mainly, act like it’s RHL). If you can believe it, RH9 is still one of the most downloaded distro’s at LQ ISO. To me, that speaks volumes. The article was a bit light on details but I am looking forward to seeing what the product actually entails.

On the desktop note, I’ve really been meaning to try SLED and have heard some great things about it (although the patent deal did put my off a bit on installing it to be honest). I just haven’t had the chance though. Hopefully soon. They announced the SP1 beta at Brainshare, so now is as good a time as any. They also released this “Mac Guy” spoof, which is superbly done. On the distribution front, after hanging out with Jono a bit at SCALE I finally installed Ubuntu for the first time (on my laptop). Not bad at all and I’m interested to see how it survives a little use and an upgrade or two. The amount of quality choice we have in the Linux market today is truly phenomenal.


Novell's Link to the Microsoft TCO Linux Message

Stephen illustrates (via this post) something that I’ve tried to put into words several times on my blog. His picture does a really good job of getting the idea across though. From the post:

Red Hat began messaging at least a year ago around the use of Red Hat linux in value creation. Here’s how the logic flows from a Michael Tiemann presentation at the 2006 Red Hat Summit:

* Companies spend on average 4-8% of income on IT (Financial companies 8-12%)
* So regardless of how you carve up the cost savings, you’re messing around with something that will NOT move the stock price anytime soon.
* IT focusing on the value creation side of the bar can help by delivering better customer service (and retention), market growth, competitive advantage.

It’s a difficult realization for some, but “being cheap” is not what makes Open Source great. Yes, the cost proposition is often compelling… but it’s the value proposition that I usually find remarkable. This sort of reminds me, although it’s a different situation, of some of the Oracle messaging around their Linux release. The major push seemed to be around cost savings. They didn’t see the irony of a company selling 6-8 figure database solutions offering 3 digit saving on an OS. An additional 1% additional off the DB would always be more. Where’s the value in that?