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Novell Paying Microsoft Not to Sue

Redacted Copy of Agreement Now Online

(May 26, 2007 - 5:38 PM) - Novell released a redacted copy of its controversial agreement with Microsoft last night after close of business in New York at the start of the Memorial Day weekend. It was part of the financial statements the company has owed the SEC since last July but hasn’t filed until now because of a lengthy internal examination of its options practices.

Along with its 10-K and 10Qs Novell released three documents that make up its deal with Microsoft: a Technical Collaboration Agreement, a Business Collaboration Agreement and the all-important 26-page Patent Collaboration Agreement that has open source hackles up because of Microsoft’s increasingly articulated contention that open source owes it royalties for patent infringement.

The agreement enshrines the pretzel-like position Novell has been forced to adopt because it appears to be paying Microsoft not to sue its customers for using Linux. In a one-sentence disclaimer it says that, “Nothing in this agreement shall imply, or be construed as an admission or acknowledgement by a party, that any patents of the other party are infringed, valid or enforceable.”

The publication of the agreement – which makes it clear there would have been no interoperability pact without the patent concessions and vice versa – raises a new set of questions for Linux users particularly in light of Microsoft’s recent claim that OpenOffice infringes 45 of its patents, free e-mail 15, unspecified free software often bundled with Linux another 68, and the user interface some 65 Microsoft patent in addition to the 42 patent the Linux kernel is supposed to infringe.

Microsoft’s promised patent indemnification to paying SUSE users specifically excludes open source software like Wine, OpenExchange, StarOffice and OpenOffice by name.

It also excludes:

• “office productivity applications (word processing, spreadsheets, presentation software etc.)…that are hosted by or running on a computer acting as a server for a connected client device” (think Google);

• “business application designed, marketed and used to meet the data processing requirements of particular business functions, financial forecasting, financial reporting, customer relationship management and supply chain management” (think salesforce.com);

• “mail transfer agents (a k a e-mail servers)”;

• “unified communications”;

• and video games consoles, console games, video game applications designed to run on a computer and online video gaming services like Xbox Live.

The implication is you can run SUSE free of patent concerns but you’d better be darn careful what you run on top of it. Otherwise you’re good for six years after the last of the covered patents expires.

It looks as if the agreement makes provision for the possibility that Novell will get acquired – it passes through –– unless, it appears, it goes to a private equity buy-out firm or a company that gets less than 10% of revenues from hardware and software. There are also safety nets for product spin-offs.

The agreement also relieves direct and indirect distributors of the fear of liability except for Wine and any freebie programs they may pass along.

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