Novell has posted a letter to the community. Here's, to me, the heart of it:
Our interest in signing this agreement was to secure interoperability and joint sales agreements, but Microsoft asked that we cooperate on patents as well, and so a patent cooperation agreement was included as a part of the deal. In this agreement, Novell and Microsoft each promise not to sue the other's customers for patent infringement. The intended effect of this agreement was to give our joint customers peace of mind that they have the full support of the other company for their IT activities. Novell has a significant patent portfolio, and in reflection of this fact, the agreement we signed shows the overwhelming balance of payments being from Microsoft to Novell.
Since our announcement, some parties have spoken about this patent agreement in a damaging way, and with a perspective that we do not share. We strongly challenge those statements here.
We disagree with the recent statements made by Microsoft on the topic of Linux and patents. Importantly, our agreement with Microsoft is in no way an acknowledgment that Linux infringes upon any Microsoft intellectual property. When we entered the patent cooperation agreement with Microsoft, Novell did not agree or admit that Linux or any other Novell offering violates Microsoft patents.
Our stance on software patents is unchanged by the agreement with Microsoft....In closing, we wish to be extremely clear that Novell is committed to protecting, preserving and promoting freedom for free and open source software. We recognize that the community of open source developers is essential to all our activities in Linux, and we welcome dialog with the community as to how we can continue to work together toward these common goals.
Chief Executive Officer
In that case, with all due respect, you should not have signed an agreement called a patent cooperation agreement that gives Microsoft the opportunity to say the things Mr. Ballmer has been saying. I believe that is obvious now. He didn't even wait until the ink was dry. And you should have considered the GPL, its importance to the community, and considered what paying royalties means in that context. And we hope you will fix this.
Update: Microsoft has now responded.
You can read it in full on David Berlind's blog. It's a very odd response:
Microsoft and Novell have agreed to disagree on whether certain open source offerings infringe Microsoft patents and whether certain Microsoft offerings infringe Novell patents....
We at Microsoft respect Novell's point of view on the patent issue, even while we respectfully take a different view. Novell is absolutely right in stating that it did not admit or acknowledge any patent problems as part of entering into the patent collaboration agreement. At Microsoft we undertook our own analysis of our patent portfolio and concluded that it was necessary and important to create a patent covenant for customers of these products. We are gratified that such a solution is now in place.
What in the world was this deal about then? It seems at this point that it was Microsoft angling for a FUD opportunity. In any case, the deal is falling apart, I'd say. Microsoft's statement alleges that they don't have to agree to go forward. But if the parties themselves don't know what they agreed to or what the words mean, how valid is the contract? A contract does require a meeting of the minds. Here's the Free Dictionary's legal definition of "meeting of the minds":
meeting of the minds n. when two parties to an agreement (contract) both have the same understanding of the terms of the agreement. Such mutual comprehension is essential to a valid contract. It is provable by the express provisions of a written contract, without reference to any statements or hidden thoughts outside the writing. There would not be a meeting of the minds if Bill Buyer said, "I'll buy all your stock," and he meant shares in a corporation, and Sam Seller said, "I'll sell all my stock to you," and meant his cattle.
There's your out, Novell. There obviously was no meeting of the minds. Without a meeting of the minds, there are no obligations. At least that's what they taught me in my class on contract law. Here's my suggestion in all seriousness: drop the patent cooperation agreement and all its peculiar addenda. Work on interoperability and marketing deals if you wish. Then the storm is over.
On a deeper level, I hope everyone will please think about what software patents are doing to the industry. Microsoft didn't have to deal with them when it was building its business, but now it has them in hand to try to bully Linux, the better mousetrap that endangers its monopoly, to death. Yes. To death. Think about whether that is the patent policy you really want, and if it isn't, you need to change it. Because the community will not let go of the GPL as its license of choice, and the GPL and software patents simply don't mix. So, if the world wants GNU/Linux to survive -- and the development model that made it happen, and by that I mean unpaid volunteers, because that is who wrote Linux -- it will have to make some changes to the US patent system, some fundamental changes, or all you'll have is things like Vista and Zune. Read their EULAs, then read the GPL, and then think it over (Vista's). What kind of world do you really want?
As the US patent system now operates, it's like the Mafia. Give me money for my patent or I'll break your kneecaps. And the threat works even if the patent is bogus. Someone really needs to clean house.
And those of you in Europe trying to decide what you want to do about software patents, is it not clear now from this incident what Microsoft intends to do if you empower them?