OSI Calls for Scrutiny of CPTN's Patents in Novell Deal

by Ostatic Staff - Dec. 30, 2010

As we recently reported, as Novell folds as an independent company as part of its acquisition by Attachmate, there is a significant patent twist. When Novell put together its deal to be acquired, the deal included the sale of a whopping 882 patents to a consortium backed by Microsoft, and it wasn't until recently that the curtain was raised on who Microsoft's partners in that consortium are. They are Apple, Oracle and EMC--some of the biggest proprietary technology companies on the planet, as is Microsoft. The consortium, called CPTN Holdings LLC, is now gaining some significant scrutiny. The Open Source Initiative (OSI) has asked the German Federal Cartel Office to investigate CPTN's patents.

According to the statement from OSI:

"The fact that Microsoft was leading the takeover of Novell’s patents was itself alarming to the open source community, but when it was revealed that Microsoft had recruited Oracle, Apple, and EMC to be co-owners of the patents, the OSI Board felt compelled to request that competition authorities take a closer look at the proposed transaction. We found that the German Federal Cartel Office was open to receive comments from the public about this transaction during the month of December, and so we drafted and sent a letter outlining our concerns and requesting that they investigate this transaction thoroughly. We have received an acknowledgement of receipt by the department in charge, and we stand ready to offer any additional assistance that may be required by investigators should they ask for such help."

The move from OSI isn't without reason. The organization's statement also notes:

"Seven years ago, Novell acquired the German Linux distributor SuSE in a transaction valued at $210M, giving Novell a position in the fast-growing market of commercial open source software. Last month Novell announced that it would be acquired by Attachmate in a transaction valued at $2.2B, causing many to wonder what will become of Novell's open source assets and also Novell's sizeable patent portfolio, which has never been used to attack open source and has in some cases caused patent aggressors to step down their rhetoric and their actions against open source software."

 Indeed, the number and significance of Novell's open source patents call for scrutiny of CPTN from regulators. Novell is nearly as old as the personal computer, and when CPTN's newly acquired patents came to light, we, along with other open source observers, expressed concern about a Microsoft-led consortium inheriting hundreds of them.

Network World asks an excellent question about the companies behind CPTN:

"When have Microsoft, Oracle, EMC, and Apple found reason to work together previously? Why would this particular set of corporate giants be willing to go in together on this set of patents?"

 There are likely to be many questions like that asked if the German Federal Cartel Office pursues a proper investigation of CPTN, which does seem to qualify as a "cartel." With Novell being acquired just after Sun Microsystems was, two out of three public, U.S. companies that were focused on open source lose their independence, leaving only Red Hat. Could the folks at Red Hat be next to back OSI's call for scrutiny of CPTN and its patents? That is probably called for.