Attachmate Purchases Novell

Novell announced last week that it will be acquired by Attachmate for $2.2 billion.  Novell has been on the auction block for a while and had been entertaining bids by multiple parties, including financial investors and a rumored look by VMWare.  A previous offer share offer was Elliott Management, and investment firm that was one of Novell’s largest shareholders.  The acquisition by Attachmate is a strategic one; Attachmate operates an existing business in the terminal emulation, fraud detection software business.  Here is Novell’s 8K filing on the merger.  Novell announced that it would continue to be the owner of its copyrights to Unix following the merger.  The rights were the subject of a lawsuit with the SCO Group over who owned those rights, which was decided in Novell’s favor earlier in 2010.

Of more interest to the open source world is the fact that Novell will separately sell 882 patents to CPTN Holdings, a technology consortium led by Microsoft and other unnamed members, for $450 million.  Initial speculation was that Microsoft’s consortium might succeed to core Novell SuSe Linux patents, patents associated with Mono (the Novell-led open source runtime for deploying .Net apps on Linux), or Moonlight, the open source runtime for Silverlight apps.  Microsoft has not volunteered details.  Whether the transaction bodes a patent threat to Linux depends on exactly what patents an involved and what they cover.  However, at least one source reports that “A quick look through the U.S. Patent Office database finds 461 patents that listed Novell under the assignee name.” — suggesting that all of Novell’s issued patents were sold, plus many applications in process (which presumably would account for the significant excess). 

However, it may be difficult for a purchaser to use those patents to pursue distributors of Linux.  Novell was a founding member of the Open Invention Network (see here for a statement from Novell motivated by Novell’s last deal with Microsoft), which would have made its patents subject to OIN’s patent policies.   OIN is essentially a patent commons for Linux; members agree to enter into cross-licenses of their patents to cover Linux, as defined broadly by OIN.    OIN’s current license agreement generally provides that any patent licenses survive a change of control — which is to be expected for such a license.  (Novell, however, probably agreed to an earlier version.)

Also, I am curious about the fate of the Novell patent pledge.

 Novell will use its patent portfolio to protect itself against claims made against the Linux kernel or open source programs included in Novell’s offerings, as dictated by the actions of others….In the event of a patent claim against a Novell open source product, Novell would respond using the same measures generally used to defend proprietary software products accused of patent infringement. Among other things, Novell would seek to address the claim by identifying prior art that could invalidate the patent; demonstrating that the product does not infringe the patent; redesigning the product to avoid infringement; or pursuing a license with the patent owner.

Does this pledge now inure to Attachmate, or can Attachmate withdraw it?  Now that the ownership of the patents and company have diverged, are the patents no longer in Novell’s patent portfolio?  The pledge does not call out patent counterclaims specifically, but that is the usual way of using a patent portfolio to defend oneself.  If Attachmate breaches the pledge, is there a remedy?  Can users of SuSe Linux rely on the pledge, even if they did not buy anything from Novell?  Does the pledge encumber the rights of CPTN, as a license would, or does it evaporate with the transfer, as a covenant might?  Inquiring minds want to know.


Author: heatherjmeeker

Technology licensing lawyer, drummer, dancer

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