DOJ limits Microsoft's purchase of Novell patents

Novell and CPTN agree to change a deal for the Microsoft-organized consortium to buy Novell patents

The DOJ limits Microsoft's purchase of Novell patents.

Microsoft will not be able to keep patents it proposed to buy from Novell under an agreement with the U.S. Department of Justice announced Wednesday.

Novell, distributor of the SUSE Linux OS, has agreed to change its proposed deal to sell patents to CPTN Holdings, a Microsoft-organized consortium of companies, in order to satisfy DOJ concerns about the impact on open-source software, the DOJ said.

BACKGROUND: Novell patent sale to shield Microsoft, Apple, EMC and Oracle from lawsuits

The agreement with the DOJ will require Microsoft to sell the Novell patents back to Attachmate, which announced in November it was merging with Novell. Microsoft will receive a license to use those patents and patents acquired by the other three owners of CPTN.

Novell has no comment on the agreement with the DOJ, a spokesman said. A representative for Microsoft didn't immediately respond to a request for comment on the agreement.

The agreement from both Novell and CPTN to modify the deal will not end a DOJ investigation into the sale, the DOJ said in a press release. But the changes will allow the first phase of the US$450 million deal to proceed, the DOJ said. CPTN, owned by Microsoft, Oracle, Apple and EMC, filed paperwork in November announcing its plan to buy 882 Novell patents.

The patent sale, as originally proposed, would have jeopardized the ability of open source software to innovate and compete in middleware, virtualization, and server, desktop and mobile OS markets, the DOJ said.

"The parties' actions address the immediate competitive concerns resulting from the transfer of Novell's patents," Sharis Pozen, deputy assistant attorney general in the DOJ's Antitrust Division, said in a statement. "To promote innovation and competition, it is critical to balance antitrust enforcement with allowing appropriate patent transfers and exercise of patent rights."

CPTN sought to buy the patents in a two-stage transaction related to Novell's planned merger with Attachmate, also announced in November. In the first phase, CPTN would acquire the patents and applications, and in the second phase, CPTN would distribute the patents to each of its four owners.

Under the agreement with the DOJ, EMC will not acquire 33 Novell patents and patent applications that have been identified as related to virtualization software.

In addition, all of the Novell patents will be subject to the GNU General Public License, Version 2 and the Open Invention Network (OIN) License, a significant license in Linux, the DOJ said. CPTN will not have the right to limit which of the patents are available under the OIN license, and CPTN and its owners will be prohibited from encouraging Novell or Attachmate to modify which patents are available under the OIN license, the DOJ said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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