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MS: We'll only interoperate if you sign a patent deal. Red Hat: No.
Wednesday, July 04 2007 @ 02:12 PM EDT

So, negotiations between Red Hat and Microsoft appear to be ongoing in the media. Hahahaha. Get real.

Here's what I think is happening. Get a load of this description of the strategy from Microsoft VP for IP Marshall Phelps:

At a keynote at Red Herring East on Thursday, Phelps explained the slow shift in attitude and valuation of patents that corporate patent spectators have been watching from the sidelines for the past few years.

He spoke about the increasing practice of using patent licensing agreements as a way for companies, and companies and universities, to pool resources and share research without losing rights, or with an agreement to share rights or revenue made off of the technology.

"For those of you in VC, this is going to be a radical departure. We used to define competitive advantage as 'I've got and you don't.' Or 'You've got it, but I got better.' Well, today it's 'You got it and I got it, but I make money when you use it," said Phelps explaining the shift to a strong emphasis on companies licensing out their patented technology.

So, let's see. How does this work? "I got it and you got it but *I* make money when you use it." Who wouldn't want that? Um... Red Hat. Why not, Microsoft beguiles. I'll tip you. And, by the way, I won't interoperate with you unless you agree. Oh, and Microsoft adds, if we assume a similarity to the Novell deal, we get to alter and control your development model and your license -- you have to agree we step over or around it somehow. And you can't just let all those end users and downstream folks do whatever they are used to doing. They have to sit in paid seats. No sharing. Or else we can sue them.

In other words, in my translation, Microsoft is refusing to interoperate well unless FOSS agrees to these patent deals, not just so it can collect money, but so it can get your brains to work for them. It also achieves a goal of FOSS costing more. Ever hear of the Microsoft tax? And it also allows Microsoft to put its heavy thumb on FOSS and reset its terms. You don't want to code for Microsoft and share your skills and your money? Don't wish to give up control or change your development model? Then they'll maybe sue you, and for sure they won't interoperate with you well. Only sellouts get to interoperate really well. What's that smell? Antitrust, maybe?

If you think I'm making that part up about wanting FOSS to code for Microsoft, here's Mr. Phelps again:

Microsoft has abandoned the fortress mentality around its intellectual property and is opening up channels of collaboration, including licensing to startups, the software giant’s licensing chief said Wednesday.

Speaking at the annual venture conference of the Council for Entrepreneurial Development at North Carolina ’s Research Triangle Park, Marshall Phelps said that even a $7.5-billion annual research budget fails to deliver all the pieces to Microsoft.

“Few, if any, companies can hold all the pieces of R&D in their own hands,” he said. “The days of go-it-alone R&D labs are over.”...

Likewise, contrary to the “myth” that Microsoft uses patents to bludgeon competitors, Mr. Phelps, deputy general counsel for intellectual property, said the company is seeking to use intellectual property to form alliances. “Proprietary software is not going away, open source is not going away.” Though licensing accounts for only .0025 percent of the company’s annual revenue, “as a vehicle for cooperation with other firms, it’s worth its weight in gold.”

They have patents (they claim) and FOSS has the brains. So they want to "use" their patent threats to force FOSS programmers to code for them. Or else. They have a demonstrated inability to write compelling software nowadays, I'd say. It's kind of like the university arrangement they've used for a long time -- the universities do the research, and then Microsoft makes the money. You did notice that all three who signed on the dotted line now code for Microsoft, didn't you?

Well, that's business the Microsoft way, their idea of what's fair.

I told you they wanted your brains. That and the death of the Open Source model in the enterprise space, as those dudes call it, and to prostitute the GPL, if it refuses to die.

But I see some stealth legal tricks. Remember the deal SCO successfully complained to the EU Commission about in the '90s, whereby it had to pay Microsoft forever for stuff they didn't want and that hobbled their ability to innovate the way they wanted? It took Santa Cruz a while to wake up and realize the legal game was not working for them and that Microsoft was controlling them to their detriment in the marketplace.

I think that there is another submarine tactic afoot. Read Microsoft's Patent Pledge for Non-Compensated Developers. That is the submarine intended to kill FOSS as we know it, I believe. They want to force vendors to stupidly agree that their best coders can't code for them any more or can only code on Microsoft's terms. Or else. And you wonder why Red Hat resists?

The real question is why Novell would sign such a deal.

Microsoft, I discern, would like it if there never again was a Linux, in short, and I guess they figure they have more money than anyone else and enough lawyers to blacken the skies anywhere on earth, so they apparently think they can force the deals with patent threats, litigation being about as pleasant a prospect as a root canal. It's worse when they have more lawyers and more money than you do.

Red Hat isn't willing to be muscled, though, and neither is Ubuntu or Mandriva, nor should they have to be. Why not? Well, there are rules for monopolies. You can't actually muscle your competition past a point without that awful antitrust smell resulting in some investigatory problems. The EU Commission has made it clear that Microsoft is supposed to share specifications with the FOSS players so interoperability becomes a non-issue. Period.

I think Microsoft would prefer to muscle some patent-linked deals they can present as an alternative to the Commission looking at this. But here's a description of what is *not* a true partnership: I'm a monopoly, and I say sign here or I'll kill your business with stupid patent litigation you can't afford and I can.

Anyway, I think it's too late for Microsoft. They came up with this patent threat strategy before the Supreme Court ruled on KSR. Microsoft's patent licensing, dream ...depends on the patents being valid and something the other side actually wishes to use and can't work around. Post KSR, I find that a doubtful proposition. Now Microsoft is frantically trying to sign people up for the old dream before everyone wakes up and notices that the entire patent landscape has changed.

In any case, Red Hat can't sign a Novell-like patent deal, even if it did want to, which it doesn't, thanks to the GPLv3. Thank you for that, by the way, all you GPLv3 authors. So even were it tempted, it can't happen ever again.

As for Linux-Watch's breathless predictions, hey, that's who predicted Ubuntu would be next to embrace Microsoft's patent deal offer. Also, it's not true, according to my sources, that Red Hat talks broke down because of the Novell deal being announced. Extrapolate.

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