Novell Tips Details Of Microsoft Linux Deal, Spotlighting FSF Opposition - InformationWeek

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5/28/2007
02:13 PM
Alexander Wolfe
Alexander Wolfe
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Novell Tips Details Of Microsoft Linux Deal, Spotlighting FSF Opposition

The Free Software Foundation, that merry band of advocates of the GNU/Linux operating system (don't call it "Linux" -- FSF president Richard Stallman will get mad), is looking to throw a monkey wrench into the peace pact between Novell and Microsoft. Under that deal, signed last November, Novell insulated itself from Linux patent suits from Redmond and got millions of dollars in much-needed cash to boot. Now, Novell financial filings release

The Free Software Foundation, that merry band of advocates of the GNU/Linux operating system (don't call it "Linux" -- FSF president Richard Stallman will get mad), is looking to throw a monkey wrench into the peace pact between Novell and Microsoft. Under that deal, signed last November, Novell insulated itself from Linux patent suits from Redmond and got millions of dollars in much-needed cash to boot. Now, Novell financial filings released last Friday reveal that, while the threat from Microsoft remains at bay, Stallman's posse may pose new problems.The salient information is contained in Novell's latest 10-Q, the regular quarterly financial report companies must file with the U.S. Securities and Exchange Commission. The form recounts the details of the November agreement, under which Microsoft agreed not to "assert its patent claims." In plain English, that meant Novell no longer had to worry about Redmond's saber-rattling over potential patent-infringement claims. Whether such claims would hold up in court or not (and judging by history, the answer is not) was and is immaterial. The big worry for a company like Novell is that any threats of lawsuits would scare customers away from its Linux products.

That's precisely what happened when SCO sued IBM and Novell in 2003. The SCO suits are on now their last legs, and the chill they created has long since passed. But, early on, authoritative industry pundits were writing that the litigation would result in a Linux "deployment pause."

It's ironic to me that Novell has had such a seemingly tough row to hoe, when its Linux OS products are so clearly superior to the stuff that's getting all the publicity -- I refer, of course, to Ubuntu. (I'll write about that more in a future post. For now, back to the Novell-Microsoft-FSF to-do.)

Along with patent insulation, Novell got lots of money out of the Microsoft pact. According to the Novell 10-Q:

Microsoft made an upfront payment to us of $240 million for SUSE Linux Enterprise Sever subscription certificates, which Microsoft may use, resell or otherwise distribute over the term of the agreement ...

Under the Patent Cooperation Agreement, Microsoft agreed to covenant with our customers not to assert its patents against our customers ... Both we and Microsoft have payment obligations under the Patent Cooperation Agreement. Microsoft made an up-front net balancing payment to us of $108 million, and we will make ongoing payments to Microsoft totaling not less than $40 million over the five-year term of the agreement based on a percentage of our Open Platform Solutions and Open Enterprise Server revenues.

So far, so good, right? Not so fast. The FSF issue rears its head toward the bottom of the 10-Q, where Novell makes a reference to GPLv3, which is the new version of the GNU General Public License that's currently in the works. (Here's a comprehensive look at the GPL3 debate, by my colleague Charlie Babcock.)

The money quote is contained in the section of the 10-Q titled "Risk Factors":

If the Free Software Foundation releases a new version of the GNU General Public License with certain currently proposed terms, our business may suffer harm.

... The FSF criticized our deal with Microsoft because it only provides patent protections for our customers rather than for all licensees of GPL software, and on March 28, 2007, the FSF released a new draft of GPLv3, known as Discussion Draft 3, that includes provisions intended to negate at least part of our Microsoft agreement.

Discussion Draft 3 includes a term intended to require Microsoft to make the same patent covenants that our customers receive to all recipients of the GPLv3 software included in our products. It also includes a license condition intended to preclude companies from entering into patent arrangements such as our agreement with Microsoft by prohibiting any company that has entered into such an arrangement from distributing GPLv3 code. This license condition does not apply to arrangements entered before March 28, 2007, so as currently proposed it would not apply to our agreement with Microsoft; however, the FSF specifically indicated that this "grandfathering" condition is tentative and may be dropped depending on feedback the FSF receives.

OK, that's a mouthful. But it's correct in its assertion that the GPLv3 draft could spell trouble and that the FSF has been considering which way to go on the so-called "grandfather" clause. (The most recent public statement from the FSF that I could find on this comes in a blog post from March 28, which says: "We're still considering the issue.")

What could be the upshot? As the Novell 10-Q puts it:

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.

All this may seem somewhat par for the corporate course. Between Microsoft and Novell, it is. They're two companies that, no matter how much they seem to be in opposition, are run by businessmen who are amenable to sitting down and discussing things.

The FSF is coming from a rather different place. As its "About Us" page says, it's a nonprofit organization that has a "worldwide mission to preserve, protect, and promote the freedom to use, study, copy, modify, and redistribute computer software, and to defend the rights of all free software users."

What's its position on Microsoft? Well, a search of the term "Microsoft" on the FSF site returns the following among the results:

  • Microsoft's New Monopoly

  • Microsoft's Treacherous Computing

  • Free as in bombs

    Long term, Novell probably has little to fear from the FSF, since the group's bark has long been worse than its bite. Plus, it's only fair to note that it's Novell here that's issued a word of caution to investors of the kind you commonly see in Wall Street documentation. For its part, the FSF hasn't thrown down the gauntlet, or in fact said much of anything on the issue recently.

    Still, looking over the whole thing, I can't help but call to mind that old expression, "Them's fightin' words."

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