The EU won't stand in the way of Microsoft & Friends acquiring Novell's patents

CPTN Holdings-a Microsoft-led group that also includes Apple, EMC, and Oracle--has the European Union's blessing to acquire Novell's patents, but there's still obstacles in the proposed deal's way.
Written by Steven Vaughan-Nichols, Senior Contributing Editor

CPTN Holdings--a Microsoft-led group with fellow-members Apple, EMC, and Oracle--isn't just still try buying Novell's patents, the group's patent acquisition attempt recently received an OK from the European Commission (EC) vice president and competition commissioner Joaquín Almunia.

As Florian Mueller, an European intellectual property activist pointed out in his blog, Emma McClarkin, a British conservative from the East Midlands, asked the EC, on behalf of a constituent, that they were concerned about "Microsoft recently purchasing a large number of patents from Novell. This move strengthens the hold Microsoft has over its competitors, which could potentially harm consumer choice and increase prices. Is the Commission aware of this situation? If so, does the Commission believe there have been any infractions by Microsoft of EU competition laws?"

On behalf of the EC, the European Union's (EU) executive branch, Almunia replied, "The Commission is aware of the proposed acquisition by CPTN Holdings, a consortium of technology companies which includes Microsoft Corp, of a portfolio of 882 patents from Novell. On the basis of the information currently available at this stage, it appears unlikely that the proposed transaction requires a notification to the Commission under the Merger Regulation."

Almunia went on, "Furthermore, in addition to the consideration under the Merger Regulation, the Commission has currently no indication that the mere acquisition of the patents in question by CPTN Holdings would lead to an infringement of EU competition rules."

That doesn't mean that the CPTN deal will have clear legal sailing in Europe. Once CPTN reapplies to buy Novell's patents, we can expect to see the Open Source Initiative and Free Software Foundation Europe to renew their protests against the deal to the German Federal Cartel Office. It does suggest that the EC is not going to start any actions to further investigate or hinder the deal.

Regardless of what happens with the EU, the deal will face opposition in the U.S. The OSI, has just announced that the group is also protesting the transaction to the U.S. Department of Justice.

Thanks to a January 14 filing with the U.S.' Security and Exchange Commission (SEC), we now know a little more about the patents that Novell is attempting to sell to CPTN. The bulk of them, which now appears to number 861 once outdated and duplicate patents were removed from the pool, are concerned with server management, security, identity and collaboration software.

CPTN may yet face some competition for the patents though. A close reading by Pamela Jones of Groklaw of Novell's Definitive Proxy Statement reveals that a group or company designated as Party E, which is neither Microsoft not CPTN, is still interested in purchasing some of Novell's intellectual property. According to the filing, "On January 13, 2011, a representative of Party E clarified that their interest is in a transaction related to an acquisition of the patents and patent applications being sold pursuant to the Patent Purchase Agreement, 'and maybe more.'"

So, who knows, Microsoft and chums may still not end up with Novell's patents. Stay tuned patent deal watchers; this transaction is far from done.

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