Since last November, there has been much discussion of the deal between
Microsoft and Novell. To an extent, it has all been talk in a vacuum,
since the actual text of the agreement has not been available. That has
finally changed, however; the terms of the agreement have been released
as part of Novell's (delayed) annual regulatory filings.
It turns out that there are three different agreements: the patent
cooperation agreement granting the patent non-licenses, the technical
collaboration agreement describing the technical work each company will
do, and the business
collaboration agreement on the business arrangements. In the case of
any disagreement between the agreements, the patent agreement wins out over
the other two, and the technical agreement beats the business agreement.
We still do not get to see the full set of terms; they have been redacted,
heavily in some places. So one is left trying to make sense of text like:
*** will exercise its *** to *** by no later than *** that (i) the
*** OpenOffice (version 2 or later) *** does or will *** Office
Open XML format ("Open XML"), and (ii) it will make a *** ***
If *** does not *** it will *** within the same time frame that
*** in the *** on a*** to *** Open XML. *** will provide its
*** to*** at least *** in advance of *** The *** will be ***
not to be *** will provide *** in the *** will *** of such ***
the Term, including through *** in the *** is defined in the
Business Collaboration Agreement.
Fortunately, the bulk of the agreement has not been so heavily obscured.
The core of the patent agreement is about what one would expect, given the
conversation over the last six months:
Subject to the Parties' compliance with the terms of this
Agreement, each party on behalf of itself and its Subsidiaries
("Covenanting Party") shall, under the terms set forth in Exhibit
A, covenant not to sue the other Party's Customers ("Covenanted
Customers") for infringement of Covered Patents of Covenanting
Party on account of such Covenanted Customers' use of Covered
Products of the other Party.
Of course, there's no end of fine print which should be read by anybody
wanting to rely upon this non-license. To begin with, Novell's customers
only get the non-license from Microsoft for as long as Novell complies with
the terms of the agreement. Many of those terms - especially in the
termination section - are blanked out. If Novell and Microsoft get into a
big disagreement in the future, the non-license could vanish overnight.
The definition of "Covered Products" is complex and full of exclusions. In
particular, "clone products" are not part of the deal:
"Clone Product" means a product (or major component thereof) of a
Party that has the same or substantially the same features and
functionality as a then-existing product (or major component
thereof) of the other Party ("Prior Product") and that (a) has
the same or substantially the same user interface, or (b)
implements all or substantially all of the Application Programming
Interfaces of the Prior Product.
Certain possible clone products shipped before the signing of the agreement
are excluded from this definition, but four (Wine, OpenXchange, StarOffice,
and OpenOffice) are explicitly excluded from the exclusion - though there
is a complicated dance to the effect that those products are not
necessarily clone products either. "Foundry products," seemingly being
those which are developed by third parties, are excluded. Then, there's
the "other excluded products" which include web-based office productivity
applications, video game consoles, business applications ("such as
accounting, payroll, human resources, project management, personnel
performance management, sales management, financial forecasting, financial
reporting, customer relationship management, and supply chain
management"), "unified communications," and, interestingly, mail
transfer agents. If you are a Novell customer running sendmail, and
Microsoft claims patents in sendmail, you can still be sued.
There's a few other details; the non-license is, unsurprisingly, not
transferable. There is an explicit clause that neither party is
acknowledging any infringement or even that the other side's patents are
valid. Lots of details on what happens when companies are acquired or spun
off. And so on. Novell has recently stated that the company itself
remains as open as ever to patent infringement suits by Microsoft, but
that's only partly true: both companies have forgiven each other for any
infringement which may have happened before the agreement was signed.
There is one exclusion here: there is no forgiveness for distributing Wine.
One last thing worth noting: at OSBC, both Novell and Microsoft refused to
comment on the possible impact of GPLv3, saying that it was inappropriate
to talk about a license in draft form. Novell is a little more forthcoming
in the "risk factors" section of its
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.
The technical cooperation agreement contains relatively few surprises.
Each company commits to working to make the other's system work better as a
virtualized guest. There will be a special "shim" layer which implements
Microsoft's top-secret hypercall API and glues it to Xen or another
hypervisor. There will be information sharing on management interfaces for
virtualized guests. An "optimization innovation laboratory" will be set up
on the U.S. east coast to "showcase, test, and validate" the various
virtualization efforts. There is an effort to collaborate on directory and
identity management. And there is cooperation around the Office Open XML
format; the first term of this agreement is the highly redacted section
quoted above, so it's hard to tell what is really going on.
The business cooperation agreement talks about creating a joint marketing
plan to sell the various activities described in this deal. Microsoft will
kick in $60 million to make this marketing happen; Novell gets to
decide how some of that money will be spent. The two companies promise to
endorse each other's offerings. Microsoft will be tossing in another
$34 million for a sales force trying to sell the combined offerings.
There is a special term prohibiting either company from selling the
combined Linux/Windows package as a single unit. Each company must
separately license its part of the offering to the customers.
Microsoft commits to buying $240 million in SUSE Linux certificates.
This section is highly redacted ("Microsoft may also *** through the
*** in which case an *** will be *** from the *** for the *** in the
Term") so there's a lot of presumably important details we'll never
Novell gets an exclusive deal in that Microsoft promises not to make any
similar deals with other Linux distributors for three years.
The bulk of this set of agreements really is as boring as some people have
claimed. It's two companies trying to make their products work better
together and to increase the market for both. The patent agreement is
worth some study, though, especially for anybody who is tempted to rely on
it to make their business somehow safer. The exclusions from coverage by
the non-license have not been highlighted by any of the PR from either
company, but they do very much affect the real nature of the coverage
provided. The complicated dance around exclusions may just be lawyers
trying to nail everything down, or it may indicate a deeper agenda
somewhere. For those of us wondering what is really going on, the release
of the text of these agreements may have shed rather less light than we
would have liked.
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