News

DoJ Cites Progress in Novell Patents Sale to Microsoft Coalition

• By Kurt Mackie
• 04/20/2011

The U.S. Department of Justice today acknowledged a positive response from a Microsoft-supported holding company that is looking to buy patents held by Novell Inc.

The Justice Department explained in an announcement issued on Wednesday that CPTN Holdings LLC had altered its original acquisition terms in response to antitrust concerns by the department. The department is working in conjunction with Germany's federal cartel office, Das Bundeskartellamt, in overseeing the proposed acquisition.

The terms altered by CPTN Holdings meet "immediate competitive concerns" by the Justice Department. However, the DoJ also plans continued oversight, according to Sharis A. Pozen, deputy assistant attorney general at the Justice Department's Antitrust Division.

"Although we recognize that the various changes to the agreement recently made by the parties are helpful, the department will continue to investigate the distribution of patents to ensure continued competition," Pozen said in a released statement.

CPTN Holdings reflects the interests of four companies, including Microsoft, Oracle Corp., Apple Inc. and EMC Corp. The group plans to buy about 882 patents from Novell, for an estimated $450 million in cash. After the patents are bought, they will be divided among the participating companies.

The deal is somewhat complicated by Seattle-based Attachmate Corp.'s plans to buy Novell, which was announced in November. Consequently, the modified terms proposed by CPTN Holdings also reflect Attachmate's involvement with the patents.

The main concern of the antitrust authorities was how the patent transfers might have affected Linux-based companies under the original terms proposed by CPTN Holdings. The original deal could have impaired innovation and competition in the desktop, mobile and server operating system markets, as well as with the middleware and virtualization software products markets, according to the Justice Department's announcement.

The open source legal watchdog site, Groklaw, was enthusiastic about the antitrust action, describing the DoJ's response as "wonderful news." The site lists reactions across the open source community, including a comment from standards attorney Andrew Updegrove, who said that the legal authorities had showed an understanding of open source software and Linux in particular in this antitrust action.

There were five points to be met by CPTN Holdings to address regulatory agency competition concerns. First, Microsoft will have to sell back the licenses to Attachmate, but it will continue to have access to the licensing. Microsoft also will have access to the licensing acquired by the other three CPTN Holdings companies, as well as to those patents held by Novell. Second, EMC won't be allowed to acquire 33 patents related to virtualization software. Third, the Novell patents will be subject to the GNU General Public License Version 2 agreement, as well as to the Open Invention Network (OIN) License. Next, CPTN Holdings can't limit patents under the OIN license. Finally, CPTN Holdings is prohibited from influencing Novell or Attachmate on which patents will be available under the OIN license, which is a license used with Linux products.

In general, Microsoft has taken an antagonistic legal approach to Linux offerings. In some cases, it has sued its own hardware partners that have used the Linux-based Android mobile operating systems. It infamously let it be known that Linux violated 235 of Microsoft's patents, without specifying the infringing technologies. On the other hand, when it comes to establishing Windows interoperability with Linux in various products, Microsoft has taken a more open and cooperative approach.