[sf-lug] More the deal between Microsoft and Novell

[Tony]

It looks like it might not be a Microsoft victory,
although it is too early to say. 

Tony

***

Novell deal to cost Microsoft hundreds of millions

By Robert McMillan, IDG News Service, 11/08/06 

Microsoft will spend more than $440 million in
licensing fees and sales and marketing costs over the
next five years to keep up its end of the historic
Linux agreement it made with Novell, according to U.S.
Securities and Exchange Commission documents filed by
Novell on Tuesday. 
Related links

The two companies announced the surprise agreement
late last week, billing it as an effort to "bridge the
divide between open source and proprietary source
software," according to Microsoft CEO Steve Ballmer.
Under the deal, Microsoft has agreed to offer
marketing and sales support for Novell's SUSE Linux
and to co-develop technologies that will help
customers integrate the competing operating systems. 

Microsoft has also agreed to distribute 70,000 SUSE
Linux subscription certificates so Microsoft customers
can get SUSE updates and technical support from
Novell. 

But the most controversial component of the deal is a
patent cooperation agreement under which Microsoft has
promised not to launch patent lawsuits against Novell
customers. 

In a note published Tuesday, Novell said this
agreement amounts to a "covenant" between Microsoft
and Novell's customers, but Linux advocates maintain
that it is effectively a patent cross-licensing
agreement between Novell and Microsoft. Such an
agreement would be in violation of Linux's software
license, the GNU General Public License (GPL), which
does not allow distributors to enter into exclusive
agreements with patent holders. 

Novell disputed this idea. "Novell's customers receive
a covenant not to sue directly from Microsoft," the
company said on its Web site. "We have not agreed with
Microsoft to any condition that would contradict the
conditions of the GPL, and we are in full compliance."
 

Free software advocate Bruce Perens said that this
argument was unlikely to hold up in court and the fact
that Novell is paying Microsoft more than $40 million
as its part of the patent agreement only makes it
obvious that the deal amounts to patent
cross-licensing. "The financial consideration makes it
even more clear that there is a patent licensing
agreement for money going on here," he said. 

The most likely candidate to sue Novell or Microsoft
over an alleged GPL violation is the Free Software
Foundation, which claims copyright to significant
portions of the Linux operating system, Perens said. 

FSF General Counsel Eben Moglen said he was looking
into the Microsoft-Novell deal but could not comment
on the documents released by Novell. 

In Tuesday's filings, Novell said Microsoft will make
an initial payment of $240 million for the SUSE
certificates and will also spend a total of $34
million on sales efforts, as well as $12 million per
year on marketing over the life of the five-year
agreement. 

Under the patent agreement, Microsoft will pay Novell
$108 million up front and Novell will pay Microsoft a
percentage of revenue that adds up to no less than $40
million over five years. 

Microsoft has also agreed that it will not engage in a
similar certificate give-away with another Linux
distributor for the next three years.