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Strike/Counterstrike: TomTom Sues Microsoft

Intellectual property Rights

It would be an understatement to observe that Microsoft's patent suit against Dutch GPS vendor company TomTom has been closely watched.  Why?  Because Microsoft alleges that several of the patents at issue are infringed by TomTom's implementation of the Linux kernel.  In this first month of the dispute, the most urgent question has been this: will TomTom fight or fold?  Now we have the answer:  TomTom has decided to fight - and perhaps fight hard.  Yesterday, it brought its own suit against Microsoft in a Virginia court, alleging that Microsoft is guilty of infringing several of TomTom's own patents.

The question that many Linux supporters are now asking is this: is this good news for Linux, or bad?  Here are my thoughts on that important question.

As always, the following thoughts are mine alone, and not those of the Linux Foundation (disclosure: LF is a client of mine) or of any other client.

First, why the angst over the question at all?  Microsoft has repeatedly stated (including in a terse press release it released yesterday) that it wishes to settle with TomTom by entering into a license agreement.  Yesterday's release included the following quote from Horacio Gutierrez, Microsoft's recently appointed corporate vice president and deputy general counsel of Intellectual Property and Licensing:

We are reviewing TomTom's filing, which we have just received. As has been the case for more than a year, we remain committed to a licensing solution, although we will continue to press ahead with the complaints we initiated in the U.S. District Court for the Western District of Washington and the International Trade Commission.

The reason the licensing question matters is the message that it sends:  Microsoft has for years been approaching vendors alleging that it owns 235 patents that it claims are infringed by popular open source software, and that several dozen of these patents are infringed by any software distribution based upon the Linux kernel.  These discussions are always behind the scenes, but when Microsoft succeeds in reaching agreement with a significant vendor, and especially a Linux vendor (like Novell), Microsoft makes an announcement, and puts another notch in its gun.  The next time it visits a vendor - or even an end user - that list gets to be longer, and the person receiving the next visit is tempted to think that there must be a basis for all those other companies signing on the dotted line.  So, it would appear, the smart thing would be to get in line as well.

Of course, the terms of these settlements are never released - which is an integral part of this type of patent infringement strategy.  In fact, the person visited may not have had to pay anything at all.  Indeed, the balance of value may have been in the opposite direction.  Or the patents Microsoft claims may be infringed by Linux may simply be thrown in along with patents the other party really needed a license for.

All of which puts a vendor like TomTom in a very difficult position.  If it had taken the license Microsoft offered a year ago, then have been added to the lengthening list.  If it settles now, after Microsoft's suit has attracted so much attention, the terms will certainly be kept secret - and Microsoft will then have a notch of real power to add to its gun - it took a vendor to court, and under threat of suit, the vendor buckled.  Surely that must mean that the patents are serious, right?

Well, not necessarily.  Companies settle patent suits all the time for purely economic reasons: it's cheaper to fold then fight, and particularly so if the plaintiff is more interested in being able to say you folded than in any license income.

Now, though, TomTom has added a new dimension to the dispute that changes the game, and allows for multiple possible interpretations of any settlement that may end the dispute.  Without question, the legal basis of the settlement would be a cross license between the companies that allow each company to use a list of stated patents of the other, thus removing the basis for the original suit, and then the second suit.

But if the terms are secret (as they surely would be), would Microsoft end up paying more to TomTom, or visa-versa, or would it be a wash?  Either way, absent a statement by the parties, there would be no way to know whether the patents that Microsoft alleges are infringed by Linux were assigned any credibility, or commercial value, at all.

On the other hand, if Microsoft's case goes to trial and decision is issued, then there will be an initial determination of whether one or more of Microsoft's patents indeed would be infringed by Linux.  I say initial, because TomTom could appeal, and there would presumably be many that would be willing to assist it in bearing the legal costs of any such appeal.  Using today as a starting date, it would be years before a final, binding determination was issued, assuming that TomTom and Microsoft did not settle somewhere along the way.  Concurrently, there would be requests to the U.S. Patent and Trademark Office to reexamine the patents themselves.

All of this underscores the great weight that Microsoft's original decision to not only sue TomTom, but to include Linux infringement claims in its suit, places on TomTom.  The greatest strength of the Linux community is solidarity, and any vendor that folds when Microsoft comes knocking to claim its right to require a license lets the community down.  But what a difficult choice - a vendor, and especially a vendor under severe financial pressure already, such as TomTom, would be sorely tempted to sign the piece of paper, perhaps without cost, and continue its struggle to survive, unmolested.  Or it can refuse, and undertake years of expensive litigation, with the possibility that at some point in the future it may lose, and bear even greater penalties, because now Microsoft will claim real damages.

Which brings us back to the original question I posed: is this new litigation good news, or bad?

Some, such as Erick Krangel, writing at Silicon Alley Insider, say bad (for both parties).  He writes:

An army of Linux crazies ranting endlessly about the 'evil' of Microsoft is the last thing the company needs as it prepares a host of new products for market like Windows 7, Kumo, and Azure. It's also worth noting that Microsoft has the best lawyers money can buy, so if TomTom really forces the dispute to trial, there's a good chance Linux can lose, with tough precedents set for the entire open source community.

Microsoft, sensibly, continues to plead for a settlement

Others, such as myself, applaud TomTom's decision.  The reason is that once Microsoft has brought such a public suit, any settlement with secret terms inevitably would leave a cloud over the Linux kernel.  Microsoft might continue to say otherwise in public, claiming that its original claims were specific to TomTom's implementation, but behind closed doors, when its licensing agents visit vendors and customers, the message would likely be quite different.  TomTom's CEO is therefore, if you will, faced with something of a Neville Chamberlain quesiton: to appease, or not to appease?  Happily, it appears that he has decided to say "enough."

But can we be sure that this is what TomTom is really doing?  That's difficult to say.  TomTom's management has a legal duty to its stockholders that transcends any duty it may feel to the Linux community.  But by countersuing and alleging patent infringement by Microsoft itself, it increases its leverage, because now Microsoft must assign a monetary risk of loss into its litigation strategy.  As a result, TomTom's bargaining power is greater today than it was yesterday.

But by how much?  Clearly, Microsoft is threatened (or, more significantly, believes itself to be threatened) more by the forward march of Linux than by the hit to its bottom line of any possible damages it might ultimately be required to pay to TomTom, should TomTom prevail on its patent claims.  Microsoft may therefore believe that it could easily justify 10 to 1 odds against victory to its stockholders, as a result of the near-term fear and uncertainty its suit might introduce into the marketplace.

Because TomTom has signaled that it is going to fight, and fight hard, rather than fold, Microsoft now knows that it must be in this for the long haul.   There will be many that will be happy to help fund TomTom's legal expenses, I suspect, and there will be hordes of FOSS community members that will floood the U.S. Patent and Trademark Office with evidence of prior art to Microsoft's (for the first time) identified Linux-relevant patent claims.  Companies large and small will lobby the PTO hard and long for a reexamination of those patents, and for a determination of invalidity.

This time around, I believe time will prove to the be enemy of Microsoft, and the ally of the FOSS community.  Microsoft is already a house divided against itself, with one internal camp understanding that Microsoft has more to gain, and much to lose by fighting rather than embracing the reality of open source.  Moreover,  its partners and customers will not support its holding action, because each of them has, in one way or another, already moved on from the proprietary world.  Microsoft is today not unlike the British empire between the World Wars, denying that its model of empire has lost its foundation, and failing to realize the consequences of that self-deception.

I believe that the schizophrenic strategy that the proprietary old guard of Microsoft continues to push, seeking to threaten Linux in particular and open source in general while simultaneously claiming to support this new model to its customers will ultimately collapse.  Just as the iron curtain eventually fell when the illusion of the Soviet economic model could no longer be sustained, I believe that Microsoft's anti-FOSS strategy will eventually collapse as well - not from assault from the field, but due to an uprising from within.

Until then, I applaud TomTom for doing the right thing.  The community can, and will, outlast Microsoft if it hangs together.

For further blog entries on Intellectual Propery Rights issues, click here

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Strike/Counterstrike: TomTom Sues Microsoft | 3 comments | Create New Account
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Novell deal
Authored by: Winter on Sunday, March 22 2009 @ 03:12 AM CDT

"But if the terms are secret (as they surely would be), would Microsoft end up paying more to TomTom, or visa-versa, or would it be a wash?"

In the deal between MS and Novell, Novell received a few hundred million dollars from MS and MS claimed Novell paid them for patents on Linux that MS owned.

That sounded odd to me then. But there were people who believed MS (or wanted to believe MS).

I have the a feeling that MS will at some time offer TomTom an enormous amount of money to recognize the patents of MS. If accepted, MS will crow that Linux is infringing unspecified MS IP.

Winter

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Strike/Counterstrike: TomTom Sues Microsoft
Authored by: Andy Updegrove on Wednesday, March 25 2009 @ 10:00 AM CDT

You're certainly right that TomTom has a great opportunity in that respect.  It will be interesting to see whether they take advantage of it or not.  I don't know the company well, so I don't know whether it has the sort of culture where doing so would be consistent with past actions or not.

  -  Andy

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