Novell patent sale to shield Microsoft, Apple, EMC and Oracle from lawsuits

Microsoft, Apple, EMC and Oracle are continuing to pursue a deal for Novell’s patents that will let the four companies split the patents four ways and immunize themselves from any potential lawsuits.

The deal, which is pending review before U.S. and German authorities, has been changed slightly because of concerns raised by the nonprofit Open Source Initiative and other parties.

As Novell undergoes a $2.2 billion acquisition by Attachmate, 882 patents are in the process of being sold to a consortium called CPTN Holdings, consisting of Microsoft, Apple, EMC and Oracle.

The Open Source Initiative says it received notice from German competition authorities at the Federal Cartel Office that CPTN is asking permission to proceed with the patent portfolio acquisition but with new conditions.

“CPTN will now only exist for long enough to distribute the shares equally among the participants in the transaction (no more than three months), and thus will not form a new long-term patent troll itself,” Open Source Initiative President Michael Tiemann writes in a blog post. “All parties to the transaction will retain a license to the full Novell patent portfolio, thus immunizing themselves from patent actions with the shares they do not hold.”

Further, “Microsoft will sell its 25 per cent share of the patents on to Attachmate and retain only a license to the portfolio,” and EMC’s share of the patents will not include any related to virtualization. That is likely because of EMC’s ownership of VMware.

“Notably, the terms of the transaction seem to have been significantly changed, apparently in response to concerns like the ones OSI expressed at the start of the year,” Tiemann writes. “OSI is very pleased that the FCO has been clear about the transaction with CPTN and congratulates them on continuing to consider the overall health of the evolving software market and not just the concerns of the existing dominant players.”

But the OSI still has concerns about the deal which it says could turn Novell’s patent portfolio “into a weapon against open source software.” The OSI sent German authorities a response which outlines its continuing concerns.

Despite the positive steps in the case of Microsoft, the OSI still faulted the deal for not requiring Microsoft to provide a patent license to the open source community before handing the patents back to Attachmate.

Oracle may use Novell patents to disrupt open source competitors in the markets for operating systems, middleware, virtualization and mobile applications and platforms, the OSI also said. Regarding Apple, the OSI raised concerns about Apple using patents to challenge Android.

The patent deal is also being examined in the United States by the Department of Justice’s Antitrust Division. Last month, Novell said in a Security and Exchange Commission filing that antitrust authorities requested “additional time to review the patent sale,” which may not close until at least April 12.

The new filing by CPTN may indicate that the patent sale will indeed close on April 12, patent watcher Florian Mueller wrote in his blog.

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