Through the Patent Looking Glass with Microsoft’s Brad Smith

'I can't believe that!' said Alice . 'Can't you?' the Queen said in a pitying tone. 'Try again: draw a long breath, and shut your eyes.' Alice laughed. 'There's no use trying,' she said. 'One can't believe impossible things.' 'I dare say you haven't had much practice,' said the Queen. 'When I was your age, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast.' 
As I expect you are already aware, Fortune Magazine's Roger Parloff has authored an in-depth, and extremely well written, article called Microsoft Takes on the Free World. The article appeared on Sunday, and immediately unleashed a torrent of secondary commentary, interviews and analysis.
As well it might. That's because Parloff reported that Microsoft General Counsel Brad Smith and other senior Microsoft executives allege that Linux, OpenOffice and other open source software violate no fewer than 235 Microsoft patents – and that Microsoft thinks it's time that those that distribute and use this software should start paying royalties. When a company like Microsoft makes statements like that, people naturally stop and listen.

But that doesn't automatically mean that they should take the statements at face value, and especially when they are so contradictory. For example, what does one make of the fact that Microsoft wants royalties, but doesn't want to sue anyone to get them? And if Microsoft really believes that it has so many patents that are being infringed by Linux, why has it waited so long to assert them? And given the differences between Linux and Windows, why has it never asserted any of its patents against the many other operating systems – including Unix - that have existed over the years, each of which presumably infringed upon some subset (presumably major) of those same patents?

Then there are the practical considerations: the fact that it would be infeasible for Microsoft to actually sue myriad vendors and customers; the fact that many of the its patents (perhaps most) would not stand scrutiny; that many distributors own patents that Microsoft is presumably infringing as well; the likely hostility that European regulators would have for such a gambit. And so on.
As a result, I believe that the marketplace is rather rapidly going to come to the conclusion that the actual risk of anyone being sued by Microsoft on these patents – ever – is, as scientists like to say, "vanishingly small." One example of a well-written article (by IDG News Service’s Elizabeth Montalbano) that heads in this direction is here. IBM’s Bob Sutor, at his Open Blog, provided a more concise commentary, brushing the Microsoft statements aside as "same old, same old". Bob’s entire comment read as follows: Again. How Tiresome.
It’s tempting to simply echo Bob’s comment. But perhaps it’s useful to dig a bit deeper (this time in Q&A form), and talk about what patents really mean in the world of high tech today – which isn’t necessarily what you’d expect. But first, a disclosure: I provide legal counsel to the Linux Foundation and am on its Board of Directors (and before was counsel to and a Board member of the Free Standards Group) as well as counsel to OASIS, the developer of ODF. However, the opinions and statements below, as always, are mine and mine alone, and are not made on behalf of these or any other clients of mine.
That said, let’s get started. Let’s talk about the patents first, for context.
Q: What do you think these patents relate to?
A: We don’t know, other than to the extent that Microsoft has disclosed its beliefs in that regard. According to Parloff’s article: 
[Microsoft licensing chief Horacio] Gutierrez refuses to identify specific patents or explain how they’re being infringed, lest FOSS advocates start filing challenges to them. But he does break down the total number allegedly violated – 235 – into categories. He says that the Linux kernel – the deepest layer of the free operating system, which interacts most directly with the computer hardware – violates 42 Microsoft patents. The Linux graphical user interfaces – essentially, the way design elements like menus and toolbars are set up – run afoul of another 65, he claims. The Open Office suite of programs, which is analogous to Microsoft Office, infringes 45 more. E-mail programs infringe 15, while other assorted FOSS programs allegedly transgress 68 
Q: Those all sound like pretty old technologies and programs. Why the big deal now?
A: Glad you asked. Presumably there’s nothing new at all, on the infringement side, or on the patent side. The only things that have changed are market conditions, which most notably include the threat to Microsoft’s market share posed by the challengers noted. Don’t forget that Linux is based on Unix, which has been around, for all practical purposes, forever. To the extent that patents on the important bits were filed, they would have been filed long ago by those that controlled Unix at the time. To the extent that they weren’t made the subject of patents, they would constitute "prior art," and could be cited against the validity of any patents filed by Microsoft thereafter based upon the same inventions.
Q: Wouldn’t a lot of these patents be getting to the end of their life as well?
A: Good point. Many presumably are, if they haven’t expired already. As time goes on, more and more of the core functionalities will be up for grabs.
Q: So many other companies (IBM, Apple, and so on) have products and patents in each of those areas, too, don’t they?
A: Absolutely. And some of those companies have been filing patents at a far greater rate than Microsoft for decades. Presumably they have many patents that Microsoft’s products would necessarily infringe. The graphical user interface for Windows, you may recall, was loosely based upon Apple products, and there was a big dispute between Apple and Microsoft over whether Microsoft had the rights to adopt its GUI. It claimed it acquired the rights under an existing license, not that it wasn’t violating Apple’s patents.
Q: Sure. You can’t patent something that someone else has already patented, can you? So if these companies got there first, before Microsoft, then you could get the rights you needed to develop your software from them, right?
A: Bingo. And in fact, there are several projects already in existence to do just that. One is called the Open Inventions Network. It was formed (and invested in) by IBM, NEC, Novell, Philips, Red Hat and Sony in 2005. OIN’s mission is to: 

[R]efine the intellectual property model so that important patents are openly shared in a collaborative environment. Patents owned by Open Invention Network are available royalty-free to any company, institution or individual that agrees not to assert its patents against the Linux System. This enables companies to make significant corporate and capital expenditure investments in Linux — helping to fuel economic growth.

Another effort to create a patent "safe haven" is the Patent Commons, which is hosted by the Linux Foundation. Here’s how it describes its mission:

The Patent Commons Project is dedicated to documenting the boundaries of The Commons — a preserve where developers and users of software can innovate, collaborate, and access patent resources in an environment of enhanced safety, protected by pledges of support made by holders of software patents. Our Library is a central, neutral forum where patent pledges and other commitments can be readily accessed and easily understood

Yet another is the Open Source as Prior Art project (which also receives support from the Linux Foundation). Together, these efforts are directed at defining, expanding, protecting and maintaining a patent "safe haven" within which open source software development and use can take place.
Q: But if Microsoft has patents that really would be infringed, why doesn’t it just come out and cite them?
A: There are two reasons that people always talk about, and a third one that in this case really matters. Let’s briefly review them.
The first one is that once you name a patent and say someone else is infringing it, then if you sue them and win, they can be held liable for treble damages – roughly speaking, three times the value of your lost sales after you put them on notice of their violation. That would make you think that Microsoft would want to name the patents immediately, wouldn’t it?
The second reason, though, is that once a patent owner does name the specific patent claims it says you are infringing, you can go to court, and ask the court to determine whether that patent was validly issued or not. As you saw above, there are a lot of companies that are willing to invest time and money in protecting Linux and other open source software. So as soon as Microsoft named a patent, those companies could, if they wished, go to court (or subsidize someone else to go to court) and try to kill it. They could also start changing the software to try and "design around" the infringement.
But the third reason, as we’ll discuss more below, is that the patents don’t really matter very much anymore anyway, except for the "Air Wars" (a/ka/ FUD) value of making people worry about infringement.
Q: All right, so I think I’m getting the picture. Operating systems and productivity software have been around for a long, long time, and many companies have patents in these areas. So, probably no single company – even Microsoft – could safely build products in any of these areas without infringing the patents of other companies. If that’s true, how do they do it? Do patents mean anything at all any more?
A: Ah – that’s the question, isn’t it? And that brings us to the point where we need to follow Brad Smith as he steps through the looking glass to try and figure out what’s really going on here. You’ll notice that in the Fortune article, Smith says that Microsoft decided that pursuing cross licenses was the route they decided to take, after considering whether to start suing people, or just throwing in the towel.
Q: Yes, I remember that. So what’s cross licensing all about?
A: A cross license is what two different companies enter into when they both have something the other wants. In this case, it would be patents underlying the same products. Cross licenses can be limited (to a single small set of patents), or domain specific (e.g., relating to a single product type), or they can even be company-wide. There is a vast, invisible web of patent cross licenses of all types that run everywhere throughout the technology industry.
Q: How do they come about?
A: Sometimes they are arrived at peacefully. For example, standard setting is in part basically an exercise in cross licensing, to the extent necessary to permit a standard to reach the marketplace on acceptable terms to adopters. And sometimes they are the result of truces that follow years of head bashing, and involve large payments to settle outstanding litigation. If you think about it, you’ll recall reading about these from time to time. An example is the rapprochement reached between Microsoft and Sun in 2004. They buried the hatchet in many areas with that agreement, while reserving their independence to compete in other areas.
Q. Got it. So let’s get a bit more specific. What’s going on with the new Microsoft announcement? What are they focusing on? What are they trying to achieve?
A: Sorry – I’ve got to do a bit more explaining first. When you get to this level of activity, you have to think of what’s going on as international diplomacy, not just commercial activity. The stakes are huge, the number of players is enormous, and everything is interlocked. You can’t just charge around like a bull in a China shop, no matter how big a bull you are.
Like diplomacy, you’re also dealing in perceptions as much as with facts. If Microsoft really did have killer patents, the usual thing would be to pick out a few small targets and sue them, overwhelming them with your legal assault, spending them into the groundt. If you’re feeling insecure about your patent, you might settle quickly, asking for a very low royalty – or even no royalty at all – from the "infringer."  As part of the settlement, the little company agrees not to disclose terms.  Then, of course, you announce to the world that you’ve "won," and that your patent has been tested and stood up to the challenge.
Next, you point to that victory to intimidate others into paying you royalties as well.  If the royalties you ask for aren’t too high, many will simply agree to pay up rather than risk being sued.  And note that it only takes one patent to block someone from selling a product, unless it pays up. The most famous example of this strategy is the Lemelson series of bar code patents, which reaped more than $1.5 billion in royalties over a period of many years before two companes, Cognex and Symbol Technologies finally decided that they weren’t going to knuckle under.  They went to court to challenge the Lemelson patents, and refused to settle.  The court found that Lemelson had improperly extended the patent filings before asserting them as "submarine patents," and that some of them should never have been issued to begin with.  Cognex rightly claimed a great victory for the marketplace.
Q: Good for them!  But why isn’t Microsoft suing a few little guys here? With that many patents, surely you’d think they would have a few good ones, right?
A: Ah – but maybe that doesn’t even matter. Let’s assume that Microsoft has existing cross licenses with many of the companies that are promoting Linux (it does). Let’s also suppose that many of those cross licenses cover operating systems and office productivity software (I don’t know that this is true, but I assume it must be). Now who do you sue? If you decided to sue a few little guys, how would you prevent one of the big guys with cross licenses from simply granting a license to the targets you picked? And how about if some of those cross licenses were up for renewal, or you wanted to expand them? How much do you want to incense the owner of the patents that you need access to? Finally, even for big companies, the costs of patent infringement law suits are huge, the results uncertain, and the time between filing suit and finally winning (or losing) is very long.
Q: So big companies don’t actually have that much freedom to use their patents to exclude competition, do they?
A: Exactly. In fact, patents today among the Big Boys are a sort of barter commodity, rather than singular weapons. Or you can think of them as Carbon Credits – something that you move around to make your life easier.
In this sense, then, the much greater value of patents is to defensive and not offensive – you get them so to preserve your freedom of strategy and movement. Sophisticated companies now largely take this view. They have patents so that other companies can’t stop them from doing what they want to do, not so that they can stop other companies from doing what they don’t want them to do. Starting to get the Looking Glass part now?
Q: I think so. So we’ve turned the system upside down and inside out: I don’t get a patent to create a monopoly, but to prevent you from creating one, right?
A: You’re catching on much faster than Alice. That’s it exactly. Once a patent "thicket" have developed in a product area, where everyone owns some patents, no one can stop everyone else from selling products there. All you can do is negotiate terms.
Q:. Got it. So can we get back to Microsoft now?
A: Yes, Grasshopper, you are now ready to receive enlightenment.
Q: Please…
A: Sorry. So let’s look at what’s actually been going on. Microsoft has announced three Linux cross license deals so far: with Novell, Dell and Samsung. In each case, it’s refused to reveal the terms. It’s also refused to identify the patents. So we’re looking at a black box, where we don’t know what value, if any, is actually being paid to Microsoft in exchange for Microsoft agreeing to cross license rights in operating system software. 
Q: The Novell deal does look awfully one-sided. Most of the cash seems to be going to Novell, not the other way around.
A: Yes indeed. The Fortune article says Microsoft explains this by saying that Novell has valuable network computing patents that Microsoft patents may infringe, and since Microsoft sells so much more than Novell, it needs to pay more. But Novell has been moving away from its network computing business for years, and Microsoft hasn’t (to my knowledge) announced anything new in this area that would create an urgent demand for access to such patents. Why did those patents suddenly become so valuable to Microsoft right now? 
Q: So we don’t know what value each party is actually placing on the Microsoft patents?
A: None at all. Cross licenses often cover an incredible range of activities that can go far beyond simple patent licensing. Look at all the territory that the Novell-Microsoft pact covers. Or go look more closely at the old Microsoft-Sun agreement I linked to above: it settled litigation, set the stage for technical collaboration, included Microsoft support for Java, Windows certification for Sun servers, and much more. As you can see, patents can be just the nominal invitation to the party, and the public announcements cover only what you want the world to know – or, more to the point, what you want the world to think.
Q: OK, so boil all this down for me, would you?
A: I’ll try. Here’s what I think the Fortune article, and Microsoft’s statements, really mean: 
1. Microsoft has said it won’t sue customers. That’s good, and makes sense. So customers can rest easy.
2. Microsoft probably can’t sue many of the companies it needs to worry about most, because existing cross licenses with those companies would prevent it. Note that Microsoft hasn’t said a word about its patents being infringed by AIX or Solaris, for example.   These cross licenses would presumably protect Linux distributions offered by the same vendors as well.
3. The agreements that Microsoft has already signed with customers and distributors may assign little, if any, value to the patents. It’s possible that the value actually went in the other direction, with Microsoft paying more to get the other party to agree to include public mention of open source patent licensing at all.
4. Microsoft is clearly feeling threatened. It’s no coincidence, to my mind, that it has suddenly linked OpenOffice with Linux in this story. Windows and Office provide the lion’s share of Microsoft’s revenues and profits, and it needs to defend them with everything it’s got.
5. Within the next week or so, the industry will be treating this as "so what" news. Lots of journalists and bloggers already are.
A: So has anything really changed?
Q:  To my mind, not much at all. Going back to my diplomacy analogy, it’s like the US moving another carrier group into the Persian Gulf when things get hot, to let the local regimes know that it’s keeping a close eye on things. Is it going to attack? No. It’s just signaling.
But I think that in this case, Microsoft may be making a miss step. By focusing so much attention on this issue, it causes more articles – like this one – to be written to dispel the FUD. And it spawns more patent-focused efforts like those noted above to support open source software development and use. The result is that instead of cowing the little people, it helps pull back the curtain.  

And then you find that all-powerful Oz (and his patent portfolio) doesn’t look so all powerful, after all.

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Comments (11)

  1. If I dual boot a system can I (an end user) still be accused by Microsoft of violating their patents?  What about running Open Office on Windows XP?

    • The GPL version 3 sounds like it forbids cross-licensing unless it covers all software covered by the GPL – what about that?  (And what about the poorly researched history of open-source software by the Fortune article – such as the inaccurate statement that gnu developed linux originally or that people developing GPL software were somehow blind-sighted by its tenets (which is arguably incorrect).)

      Cross licensing, to me, is not the answer – because open source is *not* about companies, it is about people writing software and donating the IP rights to the community, not writing software and having that software supported by a company – that changes pretty much everything about open source software, and perhaps that what Microsoft wants to do.  They want to shift the rules of the game back from open source back to competing against a single company.  They can usually destroy single companies, but they’ve had trouble with the open source community.

      • Sorry, I accidentally replied to the comment on open office and windows xp instead of commenting on the article.  I since commented on the article…  sorry to take up space…

  2. Cross-licensing is essentially forbidden by the GPL version 3 unless it covers everyone, not just specific companies that make deals with Microsoft?  It has always basically had that intention but it spells it out because of the legal maneuvering of Microsoft and Novell.  That’s what’s cool about open-source – Joe Blow can make a distro and do fun things with it and add value to it and donate those changes back to the community.  So can Google, so can China, so can Nokia, so can a consortium of Russian computer manufacturers, so can I.

    Cross licensing, to me, is not the answer – because open source is *not* about companies, it is about people writing software and donating the IP rights to the community, not writing software and having that software supported by a company – that changes pretty much everything about open source software, and perhaps that what Microsoft wants to do.  They want to shift the rules of the game back from open source back to competing against a single company.  They can usually destroy single companies, but they’ve had trouble with the open source community.

    (Not to be rude to the author of the article but gnu didn’t originally develop linux and people developing GPL software didn’t seem to be blind-sighted by the tenets of the license – the license is fairly clear and concise – you donate your IP rights back to the community when you open-source your code for the good of all.  The author seemed to say that the GPL was sneaky or deceptive to developers.)

    • Hmmm..actually, I wasn’t writing about the GPL at all, but about traditional commercial licensing.  What I was describing is the sort of cross license that Microsoft wants – which is definitely _not_ a community type license.  When I was mentioning Unix and Linux together, I only meant that for most, or even all, of the patents that Microsoft may have in mind, it’s likely that Unix must have been infringing on those same patents for many years, given the similarities between Unix and Linux (the same way a mountain bike and a road bike would violate many of the same patents).  If there really is infringement, how come Microsoft never asserted its patents against all of the flavors of Unix?  Sorry if that wasn’t clearer.

        –  Andy

      • I’m sorry if I wasn’t clear too.  I meant to say the author of the original Fortune article.  It seemed that he made some seemingly authoritative statements to an audience that may not be familiar with open-source software and to me they didn’t seem accurate.  Maybe I should have just written to him directly via the Fortune email system or something, but it was just a side note.  Even here in the Q&A he seemed a little haughty about what he knows, though I’m not sure of his background but with his statements about open-source, I’m not sure.  Anyway, it’s nice of him to do the Q&A in any case.  Thank you for the response Andy.  I’m grateful to both of you for taking the time to clarify.

        – Jeremy

  3. Hello Andy,

    Thank you for this article; I found it a most interesting read.  I’m giving a presentation soon on GNU/Linux for a bunch of folks, and I will use some of the points that you’ve made here if I get any questions about GNU/Linux’s legality.

    There is one point about which I have a question.  It’s in your Point #2, where you "boil it down" and describe what you think of the Microsoft announcement:

    "2. Microsoft probably can’t sue many of the companies it needs to worry about most, because existing cross licenses with those companies would prevent it. Note that Microsoft hasn’t said a word about its patents being infringed by AIX or Solaris, for example.   These cross licenses would presumably protect Linux distributions offered by the same vendors as well."

    IBM, AIX’s author, actually doesn’t make a GNU/Linux distribution, so if they’re simply reselling, say, Red Hat Enterprise Linux or pre-installing, say, Debian GNU/Linux, I’m not sure how a cross-license between Microsoft and IBM would protect any software put out by a third party (Red Hat and Debian, in these examples).  With Sun and Solaris, it appears to be even more distant, as Sun makes it clear that it doesn’t pre-install GNU/Linux on any of its servers, only Solaris.

    With Dell and its GNU/Linux desktop initiative, it appears to me that it could be similar.  Dell might pre-install, say, Ubuntu.  However, I’m not sure how a patent cross-license between Microsoft and Dell would protect, say, Canonical, or any of Canonical’s customers.

    Am I missing something here?  Could Microsoft probably sue, say, Red Hat, the Debian Foundation, or Canonical Ltd., even if it probably cannot sue IBM or Sun?


    –Sum Yung Gai

    • Hi,

      These are good questions, and I should preface my (attempts) at answers by saying that I’m not a patent attorney.  So when I start getting down to the level of specific situations, my confidence level in what I say starts to drop.  That said, I’ll take a crack at your questions.

      My reason for mentioning AIX and Solaris is that they are similar enough to any Linux distro that it’s likely that a large percentage of the patents that a Linux distro would infringe would also be infringed by any of the flavors of Linux.  So if Microsoft had a cross license with a Unix vendor that covered each company’s operating system patents, then presumably the same cross license would also cover most or all of the patents that a Linux distro might infringe.  That’s step one.

      Step two would involve the specific terms of the cross license.  If, for example, the terms allowed (in this example) IBM to not only develop and commercialize operating system software, but the full litany of rights (e.g., "develop, distribute, sell, offer to sell, etc.") then it might well cover selling a box with someone else’s Linux distro on board.  It’s less likely, but not impossible, that the terms might permit IBM to sub-license the same rights.  Sometimes (as Apple found, with its GUI) an agreement can cover circumstances that the parties hadn’t thought of at the time they signed the piece of paper.  So it’s possible that you might see some new distribution deals happening as a result of the Fortune article, assuming that customers care enough to call for them.

      Regarding whether Microsoft could sue Red Hat et al:  one argument that they might offer would be why Microsoft has waited so long to spring the trap?  See the additional detail I just added to the blog entry about half way through regarding the Lemelson patents, which is something that I would point to if things ever actually ended up in court.

        –  Andy


  4. Another thing is: for Microsoft (as for all big patent holders these days) these patents have monetairy value.
    However, the moment Microsoft tries to use the patents as weapons it stands the real chance to lose them. And shareholders don’t like to see a company lose money.

    Makes you think… What does Microsoft really have?

    – A lot of patents (worth unknown and uncertain)
    – A lot of software == copyright, of which 90% is probably worth nothing, and of which 100% is going to be worth nothing in five years.
    – A -really- big company.
    – Oodles of cash.

  5. “If people had understood how patents would be granted when most of today’s ideas were invented and had taken out patents, the industry would be at a complete standstill today. … The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high. Established companies have an interest in excluding future competitors.”
    ­ 1991 Bill Gates, Microsoft

    The quote above is the primer to what Microsoft is about. It is about "excluding future competitors", plain and simple. Let me make my case for why.

    Let’s assume FOSS developers do _not_ want to violate the law. As there is not a _single_ instance of _any_ FOSS project being charged (I think we can all agree SCO doesn’t count) much less found guilty of violating either copyright or patent, the previous assumption seems valid by any reasonable metric. I hope you would be willing to agree to that and state as much. Certainly the numerous calls to simply point out what might be considered a violation from many quarters would reinforce that assumption, as would the open nature of development. You simply can not expect to succeed with an intentional violation when that violation will exist open to the scrutiny of the entire world.

    Now lets go over some hypotheticals.

    1) Microsoft’s patents are valid.
    2) They successfully prosecute someone with deep pockets, let’s say IBM.
    2) they are awarded the maximum damages possible.
    4) There is no counter action.

    What could the hypothetical consequences be of those hypotheticals?

    1) IBM has (wildly, astronomically high) a charge of 4 billion to pay out, huge bite but they will go on.
    2) All offending code has to be adjusted to deal with the patents, lets say it takes a year (again wildly inflated for our hypothetical).

    This is an ideal set of hypotheticals and would seem to satisfy the stated desire and requirement of Microsoft toward their fiduciary shareholder responsibility and business 101.

    Now for any other company 4 billion would be the lottery but for MS it a quarters proffit. While shipping reduced functionality software would be a blow to FOSS until they deal with rewrites, it won’t be a killer. It could stall adoption, it could send some to Novell, it could even eat into the install base. But the truth is it’s FOSS, even if all the paid programmers leave, it will continue. In all the countries that haven’t yet introduced sw patents, among all the poorer countries that face the choice of reduced functionality software or the increasing difficulty of pirating it will go on.

    Microsoft suing and wining doesn’t change the rules of the game, it doesn’t get them what they want. So what do they want?

    MS has a monopoly of some 90% on desktops, market share of some 60% in servers, what about 95% of office suites. This is the bulk of their revenue. Their first directive is to not lose revenue, their second directive is to increase revenue.

    There are three primary ways MS can increase revenue (not withstanding the marginal increases to be had from increased efficiencies)

    1) Derive more revenue from their current market share.
    2) Increase their market share.
    3) Successfully enter new markets.

    Yea, I know much of this is elementary, bear with me.

    Microsoft’s ability to increase revenue from current market share comes from two quarters, price increases and reducing piracy levels. The primary constraint on price increases comes from Linux, without it they are once again the lowest price offering (granted OSX as a broken out item is less than XP but as a system it is generally higher). While they have historically drastically undercut UNIX much of the current server market can’t support UNIX pricing levels, the point being that for the current installed base there are modest limits to what they can achieve through price increases. Piracy is another matter. If we assume an average global piracy rate of 50% we are talking about real money. To take advantage of that MS needs two things, one they need a way to enforce payment and second they need to be the lowest cost or only choice (especially if we assume that one of the primary motivations to piracy is economic). The easiest, surest way to enforce payment is a technological kill switch, a capability MS is clearly building toward. Now once they build that kill switch before they throw it they have to make sure there is no credible alternative, and certainly not one that is cheaper and arguably of comparable functionality.

    Increasing market share, MS is a victim of their own business success here. It’s hard to go anywhere but down with some of their market percentages, unless you factor in the growth of their current markets. Currently about 1/6 of the world is computerized, if we assume a conservative 1/2 of the population ends up computerized that is a threefold increase in market size. Unfortunately for MS the next 2/6 are less affluent than the current 1/6, how much of that market can they count on capturing if they aren’t the lowest cost option? This is what MS has to be most focused on. If Linux remains in the market what percentage of this increasingly cost conscious 2/6 will break to Linux, 30%, 50%, 70%, especially if they are forced to actually pay for it? If it is even the conservative number a very important thing happens, their position as a monopoly falters.

    MS’s record on entering new markets has two success rates one for markets that have a corollary to a market they currently dominate, and a very different one for markets without that corollary. Additionally, the resistance from possible partners for new markets has increased over time do to there predatory business practices. Clearly their ability to quickly dominate new markets and set defacto standards is fundamentally affected with the loss of monopoly positions. Without monopoly position they have to compete in ways they haven’t had to for some time.

    MS has two advantages over nearly all other competitors, first is their monopoly position and second is the extent of the network effect that they can bring to bear throughout their platform. FOSS is the only other cohesive entity that has been able to credibly challenge the former and can match the latter. From a global perspective it is FOSS that provides the competition and obstacle to all of MS’s growth opportunities, market by market. And these growth opportunities dwarf by many orders of magnitude even the the most wildly optimistic possible monetary wins from litigation.

    The only worthwhile goal here for MS is "excluding future competitors", and they can’t achieve that by actually going to court.

    But what happens if they can get Redhat and other successfull commercial organizations to do similar Novell deals? It seems you would begin to fracture the FOSS comunity and this has to be their goal. Their efforts to date have been to divide FOSS participants, whether that is their effort to differentiate between paid and non-paid developers or one FOSS distributor from another. If Novell developers are free to develop code that is "safe" from MS patents but no one else is safe to use it, they have created a division. If other distributors do a similar Novell deal only "distributors" that MS is willing to do such a deal with are safe to distribute the code. If MS is successfull propagating the Novell deal it fractures the FOSS ecosystem _as well as_ giving them a revenue stream, but the primary goal is to short circut the virtuous cycle of FOSS licenses. Divide and conquer is the goal here and that is not accomplished by going to court.

    Foss can’t continue as it has on code that is patent encumbered, and if MS can get a percentage of FOSS players to accept that premise they have taken the first step to halting it.

    That’s the game they are up to. It’s not about collecting royalties on patents, it’s about rolling in a Trojan horse to destroy the community from within.

    • Thanks for this very interesting and thoughtful post.  Your conclusions make for sobering reading.

        –  Andy

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