Novel – Microsoft Agreements Revealed

On November 2, 2006 Microsoft Corp. and Novell Inc. announced that they had entered into a series of three landmark business and technical collaboration agreements centered around the development and marketing of Novell’s SUSE Linux Enterprise Server (“SLES”) and related Microsoft technologies. The agreements proved immediately controversial in the open source community, and many companies have been closely monitoring the events surrounding the agreements since their announcement. Indeed, the announcement of these agreements is credited with influencing both recent revisions to the current draft of GPLv3 and the overall schedule for the GPLv3 drafting process itself. Today, Novell filed redacted versions of each of these three agreements with the U.S. Securities and Exchange Commission as part of its long-delayed Form 10-K Annual Report. The agreements now available on the SEC web site are as follows:
· Business Collaboration Agreement: Under the Business Collaboration Agreement, Novell and Microsoft agree to provide a combined offering consisting of SLES and a subscription for SLES support with Microsoft Windows Server, Microsoft Virtual Server and Microsoft Viridian. The offering is specifically directed toward customers desiring to deploy Linux and Windows in a virtualized setting. In connection with the offering, Microsoft has purchased “certificates” from Novell that allow the certificate holder to redeem subscriptions for SLES support from Novell. Under the Agreement. Microsoft may either use or distribute the certificates over the term of the agreement.
· Technical Collaboration Agreement: Under the Technical Collaboration Agreement, Microsoft agrees to provide funding to help the two companies accomplish several broad objectives: (1) development of technologies to optimize SLES and Windows running in a virtualized setting; (2) development of tools for managing heterogeneous virtualization environments; (3) development of translators to improve interoperability between Microsoft Office and OpenOffice; and (4) collaboration on improving interoperability and management between Microsoft Active Directory and Novell eDirectory.
· Patent Cooperation Agreement: Under the Patent Cooperation Agreement, Microsoft agrees to covenant with customers of Novell not to assert Microsoft’s patents against those customers for the customers use of products and services of Novell for which Novell receives revenue. In return, Novell agrees to covenant with Microsoft’s customers not to assert Novell’s patents against Microsoft’s customers for their use of Microsoft products and services for which Microsoft receives revenue. In addition, the parties each released the other (and their customers) from any liability for patent infringement arising prior to November 2, 2006, with certain exceptions.
The full impact and significance of the three agreements between Microsoft and Novell have likely yet to be realized. However, give the recent series of public statements by Microsoft alleging that Linux and other popular open source projects infringe multiple of Microsoft’s patents, the controversy regarding these agreements is not likely to soon abate. HRO has been monitoring the Novell-Microsoft relationship on behalf of several clients


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