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patent licensing

Recently I wrote post about Microsoft FUD and risk for Linux user, especially Redhat Linux users. I received couple of emails. One of them pointed out me Gartner research report entitled "Microsoft Patent Claims Pose No Immediate Risk for Users":

Microsoft claims that a variety of open-source software projects violate its software patents. A general trend toward more aggressive patent licensing tactics is on the horizon. Gartner believes that Microsoft will not seek to litigate patent claims against users. Instead, we think the company will attempt to pressure technology providers to come to the table and negotiate an equitable licensing or royalty arrangement in instances where Microsoft can prove its claims of infringement.

IT providers have amassed software patent portfolios for many years. Patent agreements among vendors are commonplace among virtually all large technology vendors. The practice is well-established as the equivalent of a legal détente among vendors that rely on defensive patents to protect their own business strategies. Vendors can and often do use patents in an offensive strategy to create control points of technology and revenue opportunities as well.

Microsoft appears to be attempting to receive a return on its investments in R&D by creating revenue opportunities from, or cross-licensing deals with, OSS technology providers through its technology patent portfolio. It believes that companies receiving revenue from OSS that is, in part, based on Microsoft's innovations (in instances where this can be proven) should be subject to the same market dynamics that drive any other commercial technology strategies.

Microsoft thinks it can best deal with the issue of open-source patent infringement by creating partnerships (such as the agreement it entered into with Novell). However, the Free Software Foundation (FSF) has strenuously objected to these efforts and has attempted to foreclose on future agreements with its proposed addition to the GNU General Public License v.3.

We believe Microsoft's public announcement of these patent infringement allegations is an attempt to increase pressure on technology providers to accept patent agreements with Microsoft. The company has had some limited success in building such agreements with Novell and a number of other providers (most recently Samsung).

Gartner finds it interesting that Microsoft has chosen to make the patent information public. Vendors typically go out of their way to avoid public disclosure of patent agreements; moreover, companies typically attempt to avoid lawsuits insofar as they potentially threaten the patent portfolios they maintain. Proving patent viability in court is much more difficult and expensive than simply creating a royalty agreement. Such an effort would place further pressure on Microsoft to explicitly list the infringing patents, which it has declared to Gartner that it will do privately with the technology providers — not with individual developers or corporate users.

We believe Microsoft is strengthening its patent portfolio to rectify what it perceives to be exploitation of its intellectual property (IP) by technology providers that generate substantial revenue from OSS, including Linux. We do not believe Microsoft intends to pursue end-user IT organizations. Instead, we believe it will use the fear of legal compliance to pressure IT providers to enter into individual IP agreements. If suppliers balk or challenge Microsoft, this could escalate into a broader conflict as large-scale commercial open-source vendors (such as HP, IBM and Sun) are pulled into the conflict when their customers and partners turn to them for protection and support.

=> Download PDF report here [ gartner.com - 117KB ]

Steve Ballmer believes that people who use Red Hat Linux have an obligation to compensate Microsoft He has warned users of Red Hat Linux that they will have to pay Microsoft for its intellectual property. SCO tried and failed badly to prove that it owns the intellectual property to Linux. They are facing bankruptcy.

Microsoft's threatening IP action without any details

I also don't know which intellectual property (IP) is Microsoft saying open source solutions are infringing on. They have denied giving out this information to the rest of us. Red Hat has repeatedly stated that it will not engage in a patent licensing deal similar to the Novell-Microsoft partnership, referring to its as an 'innovation tax'. Microsoft inked a partnership with Novell last year in which Novell agreed to license Microsoft's intellectual property in exchange for a patent pledge to users of Novell's SuSE Linux.