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Novell Files Definitive Proxy Statement: Someone May Be Interested in the Patents and "Maybe More"
Tuesday, January 18 2011 @ 06:24 PM EST

Novell in a filing with the SEC it calls its Definitive Proxy Statement reveals that this month, on January 11, someone contacted Novell wishing to discuss buying the notorious 882 patents and maybe more:
On January 11, 2011, representatives of Party E contacted one of our executive officers who reported that such representatives had been following recent media reports of our pending transactions and were prepared to discuss “reasonable, competitive terms” of a transaction with us. On January 13, 2011, a representative of Party E clarified that their interest is in a transaction related to an acquisition of the patents and patent applications being sold pursuant to the Patent Purchase Agreement, “and maybe more.”
This filing was on January 14, so stay tuned.

The 882 patents turn out not to be 882 after all. There are only 861, and the Microsoft consortium would like some of Attachmate's to make up for the few they've discovered don't exist... Wait. What? Attachmate was to get only patents and copyrights associated with Novell's UNIX and Linux businesses, right? Microsoft wants some of those? Like, um... some UNIX copyrights perchance? Novell says Attachmate won't "currently" consent.

What about later? Is this some kind of hustle?

Here's that section from the proxy statement:

In the course of preparing our patent files for transfer to CPTN in connection with the closing of the patent sale, we determined that 19 of the patents to be sold to CPTN pursuant to the Patent Purchase Agreement are lapsed Australian, German or Austrian patent applications rather than issued Australian, German or Austrian patents. We also determined that one issued patent was referenced twice. As a result, if the patent sale occurs, CPTN would purchase 861 issued patents and pending patent applications and 20 lapsed patent applications. While Novell does not believe that the foregoing should have any effect on the parties’ respective rights and obligations under the Patent Purchase Agreement, CPTN has proposed to Attachmate and us that Novell provide it with additional issued patents and pending patent applications currently held in Novell’s intellectual property portfolio. The stated rationale behind CPTN’s proposal is to address a terminal disclaimer issue known to CPTN, Attachmate and us at the signing of the Patent Purchase Agreement, to address certain potential future terminal disclaimer issues, to unite certain patent families, and to compensate CPTN for the reduction in issued patents which would be acquired by CPTN. Attachmate has informed us that they currently do not intend to consent to our changing the list of assigned patents under the Patent Purchase Agreement.

The issued patents and patent applications to be sold to CPTN pursuant to the Patent Purchase Agreement relate primarily to enterprise-level computer systems management software, enterprise-level file management and collaboration software in addition to patents relevant to our identity and security management business, although it is possible that certain of such issued patents and patent applications read on a range of different software products. Approximately 43% of these are US issued patents; approximately 30% are US patent applications; approximately 22% are foreign issued patents, and approximately 5% are foreign patent applications.

Historically, the issued patents and patent applications included in the patent sale have been used to facilitate and protect our current and planned business activities, and to reduce the risk of potential infringement claims against us. We do not currently license any of these issued patents and patent applications on a royalty-bearing basis, but the patents are subject to specific non-royalty bearing licenses granted by Novell during the period of its ownership of the patents.

We and Microsoft are parties to a Business Collaboration Agreement, a Technical Collaboration Agreement and a Patent Cooperation Agreement that collectively were designed to build, market and support a series of new solutions to enhance the interoperability of Novell’s products with Microsoft’s products.

And if the merger doesn't happen and CPTN decides to choose the cross license option, here's more on how that would work:
In the event that CPTN has elected to continue the Patent Purchase Agreement following a termination of the Merger Agreement as described above, we and CPTN will enter into a royalty-free, fully paid-up patent cross license for no additional consideration, effective as of the closing, with respect to all patents and patent applications owned or controlled by us and CPTN on mutually acceptable terms that are no less favorable in the aggregate to either party than the terms of any other patent cross license offered by CPTN to any other person (other than any member of CPTN or an affiliate of any such member). We believe that obtaining such cross license under these circumstances would permit us to conduct our businesses in substantially the same manner following a closing of the patent sale as we currently conduct such businesses.


Novell Files Definitive Proxy Statement: Someone May Be Interested in the Patents and "Maybe More" | 172 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here please, if needed
Authored by: tiger99 on Tuesday, January 18 2011 @ 06:35 PM EST
Please indicate the nature of the correction in the title of your post to assist

[ Reply to This | # ]

Off Topic here please
Authored by: tiger99 on Tuesday, January 18 2011 @ 06:39 PM EST
A suitable punishment will be devised for anyone who posts something on-topic in
this thread.

Please remember to make clickable links where appropriate, and if doing so,
remember to post in HTML mode. Preview is your friend!

[ Reply to This | # ]

Newspick discussions here please
Authored by: tiger99 on Tuesday, January 18 2011 @ 06:41 PM EST
As always, please indicate which Groklaw newspick item you are discussing in the
title of your post.

Also, as someone pointed out the other day, please make a link to the relevant
Newspick item so it can still be found after it has scrolled off page.

[ Reply to This | # ]

Comes comes here
Authored by: tiger99 on Tuesday, January 18 2011 @ 06:42 PM EST
If you are working on the Comes transcripts, you know what to do....

[ Reply to This | # ]

Novell Files Definitive Proxy Statement: Someone May Be Interested in the Patents and "Maybe More"
Authored by: dacii on Tuesday, January 18 2011 @ 07:58 PM EST
My hopes would be that someone is also interested in rescuing SUSE. It was a
good distro before the M$ agreement. Switched my family over to UBUNTU
recently. They are happy with it. But I would like to see SUSE free of bad
agreements. The patent offer is cool, if they share it with the open source
groups, but time will tell. I am not sure how a new offer could be any worse
than the current one, but I know Murphy is very surprising at times, so I wont
hold my breath.
Another twist might be an offer for the patents and an offer for just the
OpenSUSE side. Leaving Novell with the UNIX and SUSE corporate licensing. But
that might be to hard to manage an agreement out of. It would be easier I think
just to spin off a fork of OpenSUSE and call it dragon linux or something.
oops, no dragon linux is already taken. Heh, now I am going to have to search
GOOGLE all night to find a lizard not associated with linux :)

[ Reply to This | # ]

Fascinating Stuff
Authored by: The Mad Hatter r on Tuesday, January 18 2011 @ 08:22 PM EST

I wonder where things will go next?

Kind of reminds me of Peyton Place.


[ Reply to This | # ]

Undisclosed buyer?
Authored by: Anonymous on Tuesday, January 18 2011 @ 09:10 PM EST
Maybe Novell's shareholders don't need to know who the rival bidder is?

[ Reply to This | # ]

Novell Files Definitive Proxy Statement: Someone May Be Interested in the Patents and "Maybe More"
Authored by: Anonymous on Wednesday, January 19 2011 @ 03:28 AM EST
I think we can read more on this: what they are saying is that the buyer
intended to acquire the patents to use them, and since they've seen there were
open source pleadings, they feel the value of their acquisition is reduced, so
the only reading is they wanted to buy them to use them against open source to
collect royalties, which they cannot fully do now because of the OIN agreement,
that is why they are asking for a compensation in the form of more patents.

It also says that Novell expects a fully paid-up cross-licensing agreement would
allow them to continue their business, so one can easily read they cannot unless
they do, which implies this is all result of a patent attack on them where they
are forced to either sell out or give up their defensive patents to avoid being
shut down.

My reading then is MS (and maybe others) directly or through a consortium made a
patent threat to Novell while offering them a graceful exit by buying their
patents and part of their business, so they could reduce the defensive portfolio
of OSS and facilitate an attack. Likely Groklaw's article advising everybody to
join OIN made them aware that the intensity of this attack might not be as
effective or immediate as they thought, and they are either trying to bail out
or to increase their return forcing Novell to sell more.

I rather suspect Novell here is the victim more than anything else. Whether they
could have done otherwise is difficult to say. Speculating, if the patent attack
was on non OSS products of Novell they would not be able to defend themselves
through OIN and then would be forced to either give up their closed-source
offerings and concentrate only on OSS products (i.e. close all non-SuSE
business) or yield to the extortion schema.

Jose R Valverde

[ Reply to This | # ]

Who is Party E ?
Authored by: Anonymous on Wednesday, January 19 2011 @ 11:18 AM EST
Anyone ?

[ Reply to This | # ]

If the merger does not happen . . .
Authored by: Anonymous on Wednesday, January 19 2011 @ 12:19 PM EST
There seems to be a clause in the Patent Purchase Agreement which allows CPTN to
decide to either step back or enter into a royalty-free, fully paid-up
cross-licencing scheme.

What happens if CPTN only holds patents for fresh air
and the paper clip? Would this mean that Novell basically gave their patents for

In case a white knight steps up to buy Novell out of this bog, would he
be forced to enter into an agreement with CPTN if they chose this option? In
other words, is this a poison pill against other potential buyers?

Why in
particular would this enable Novell to continue their business as before?

[ Reply to This | # ]

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