Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

Summary: Microsoft and other members of the CPTN Holdings group that is attempting to acquire more than 800 Novell patents are altering their original agreements to head off potential antitrust concerns, the U.S. Department of Justice (DOJ) on April 20.

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Microsoft and other members of the CPTN Holdings group that is attempting to acquire more than 800 Novell patents are altering their original agreements to head off potential antitrust concerns, the U.S. Department of Justice (DOJ) on April 20.

Last November, Seattle-based Attachmate Corp. announced plans to buy Novell for $2.2 billion. At the same time, Novell announced the “concurrent sale of certain intellectual property assets to CPTN Holdings LLC, a consortium of technology companies organized by Microsoft Corporation, for $450 million in cash.” Microsoft officials originally refused to divulge which other companies were part of CPTN, but it came to light that the CPTN group also included Apple, EMC and Oracle.

Antitrust flags were raised almost immediately about the terms of the deal, and both the U.S. DOJ and the German Federal Cartel Office began investigations.

"As originally proposed, the (CPTN) deal would jeopardize the ability of open source software, such as Linux, to continue to innovate and compete in the development and distribution of server, desktop, and mobile operating systems, middleware, and virtualization products," said the DOJ in a statement today. "Although the department will allow the transaction to proceed, it will continue investigating the distribution of the Novell patent to the CPTN owners."

Today's press release from the DOJ explained the new requirements:

  • Microsoft will sell back to Attachmate all of the Novell patents that Microsoft would have otherwise acquired, but will continue to receive a license for the use of those patents, the patents acquired by the other three participants and any patents retained by Novell
  • EMC will not acquire 33 Novell patents and patent applications that have been identified as related to virtualization software
  • All of the Novell patents will be acquired subject to the GNU General Public License, Version 2, a widely adopted open-source license, and the Open Invention Network (OIN) License, a significant license for the Linux System
  • CPTN does not have the right to limit which of the patents, if any, are available under the OIN license
  • Neither CPTN nor its owners will make any statement or take any action with the purpose of influencing or encouraging either Novell or Attachmate to modify which of the patents are available under the OIN license.

Under the CPTN plan, the four companies in the cartel planned to buy the 882 patents in question in a two-stage transaction. First, CPTN would acquire the patents and applications, then the patents would be allocated and distributed to each of the four companies.

Topics: Security, Legal, Open Source, Software

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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23 comments
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  • So in a nutshell

    CPTN buys the patents, sells them back and gets their money back, but gets to use the patented stuff for free without restriction.
    Nice. I wish I could get my car dealer to give me deal like that.
    Will Farrell
    • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

      @Will Farrell
      Well said. :D
      Ram U
    • Nice way of putting it.

      @Will Farrell
      Less words, easily understandable.

      (BTW: I wish my dealer would do that too!)
      John Zern
  • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

    This is the bomb:
    "All of the Novell patents will be acquired subject to the GNU General Public License, Version 2, a widely adopted open-source license, and the Open Invention Network (OIN) License, a significant license for the Linux System"
    Very nice article....
    kirovs@...
  • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

    Microsoft gets patent protection from linux lawsuits. This is going to work out quite well for them.
    Loverock Davidson
    • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

      @Loverock Davidson
      Yeah, I forgot about those thousands of lawsuits Linux has brought so far against MS. My bad.
      ROFL.
      kirovs@...
      • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

        @kirovs@...
        Doesn't matter now, Microsoft is protected, linux lost out.
        Loverock Davidson
      • The past is the past, the future not written

        @kirovs@...
        so even though there have been none, doesn't mean there wasn't ever going to be.

        The way it is now, that future won't happen in regards to these patents.
        Will Farrell
      • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

        @Loverock Davidson....the spin in the comment is making me dizzy!

        Circular logic much?
        chipbeef
      • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

        @Will Farrell@... <br>Will I am not sure if I should put you in the "Loverock" category....<br>Here is the thing.... The only patent threats have always been one way- guess which one.<br>I see you are quite gloomy, thinking the future won't happen... Anyway, I am happy, you are happy, even Loverock is happy. Maybe you are gonna be even happier if MS GPL'ed everything?
        kirovs@...
    • Most likely a defence against patent trolls

      @ Loverock Davidson<br><br>I doubt there are any substantial Linux-related patents, since Linux is a clone of Unix, and cloning doesn't usually involve the creation of patentable IP. Moreover, given the likelihood that Linux violates all sorts of patents held by the developers of Unix, a Linux vendor (apart from Novell, who own the Unix patents) would be mad to try to sue anyone else -- any target would probably have far more patent ammunition to use against Linux than the other way round.<br><br>The value in Novell's patent library probably comes from the firm's acquisition of Unix System Laboratories from AT&T in 1993 (part of a failed attempt to compete with Windows NT). If the Unix patents were to fall into the hands of a patent troll, they could potentially do serious damage to Apple and Oracle, since Mac OS and Solares are Unix OSes, and to a lesser extent to Microsoft, especially in relation to the Subsystem for Unix-based Applications included in some version of Windows (including server versions), which includes Unix and BSD software. There may also be networking-related patents involving some of Novell's other products, e.g. Netware, which was the leader in PC networking before Windows NT came along.<br><br>It's pretty clear that the regulators are concerned that the potentially massive degree of violation of Unix patents by Linux could be used as a litigation weapon against Linux vendors, who'd be unlikely to have much in the way of patents to counter-sue with (with Novell out of the picture). Since Windows is the dominant server OS, and the overwhelmingly dominant desktop OS, acquisition of patents that could have been used with fatal effect against the much smaller Linux vendors clearly had the potential to be anti-competitive.<br><br>One thing that puzzles me is the mention of the GPL. I'm not sure how patents can be acquired 'subject to the GPL', since the GPL is a copyright licence. Maybe someone with more information can explain that.
      WilErz
  • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

    Too bad for MS. They were hoping to use the Novell patents to sue the open source community directly for using open source software. Since they must now leave the GPL 2 as is, MS will have to continue the method they have been using for years. Namely, download and strip GPL notices from open source software, port it to Windows, patent it as Windows technology, then threaten to sue the open source community for using software that was created as open source in the first place.
    anothercanuck
    • Is that why they did that?

      @anothercanuck
      The only flaw with that idea is that lawyers aren't that stupid - they wouldn't sign a license for the patent that does allow them to keep using the IP if it changed hands.
      Why invest millions into something based around a patent if there was even a remote chance that it would be taken away the day before I release my product?

      MS knew they never had that ability with these patents, so your conspierecy theory dosn't wash.
      Will Farrell
      • Good catch

        @Will Farrell
        I would have to agree, nobody licensing a patent would sign and invest on the [i]assumption[/i] that it would not be taken away.
        John Zern
    • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

      @anothercanuck
      I Started using a PC in the times of Dos 3.3. I also used a whole lot of freeware and public domain utilities. Most of these ended up being included in successive version of dos up to the last version of Dos - 6.02 I believe. We have a saying in India - A monkey may grow old but does not give up the habit of somersaulting.
      pmshah@...
      • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

        @pmshah@... DOS as a stand alone OS went to 6.22, although Win 95 used DOS 7 as the hidden base. I forget how to verify the DOS in Win 95, but version is sticking out in my mind for some reason.
        techrepublic@...
    • Barmy

      @ anothercanuck

      You couldn't really have got it any more backwards. Most open source software is cloned from proprietary software, not the other way round. A few examples are Linux (clone of Unix), GnuStep (clone of NextStep), Samba (clone of SMB), Mono (clone of .NET), etc.

      Cloning is what open source developers do!
      WilErz
  • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

    'Twould be interesting if Microsoft were caught embedding open source code in a product and were then required to open source the entire product. :-)
    paul.watson
    • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

      @paul.watson
      That would require reverse engineering - which to the best of my knowledge has been made a crime by M$'s paid cohorts in Washington.
      pmshah@...
      • RE: Microsoft-backed CPTN alters Novell patent acquisition terms to appease antitrust authorities

        @pmshah@...
        Does that include source code that was "found" while browsing the internet??
        12312332123