By Michael Azoff, Senior Research Analyst, Butler Group

Fortune Magazine's Roger Parloff broke an important story on May 14: "Microsoft takes on the free world" (there is a link at: http://money.cnn.com/ magazines/ fortune).

The gist of the story is that Microsoft's licensing unit has been, for the past few years, working behind the scenes to capitalize on its patent portfolio, in particular persuading large corporate users of Free Open Source Software (FOSS) to pay a license for what Microsoft claims are 235 infringements by FOSS of its patents. The software affected includes Linux, and the November 2006 deal cut between Microsoft and Novell, which had notorious patent aspects, gave a glimpse of the activity behind the scenes.

What the Fortune article does is make public Microsoft's extraction of licenses from FOSS users and this activity needs to be brought to public scrutiny.

FOSS is important and also big business. For example, the U.S. Department of Defense (DoD) advocates FOSS, and Sun Microsystems has recently turned towards FOSS with its opening up of the Java platform under the GNU General Public Licence (GPL) - the strong brand of FOSS licensing - as well as Java support tools.

However, tied into the Microsoft story is the issue of software patents: software patents have been granted in the USA for over two decades, in many cases granted with insufficient scrutiny and prior art investigation, in the knowledge that any dispute can be dealt with through the courts in litigation. However, the problem is that litigation is expensive; even for a large corporate user of FOSS it is far preferable to pay up and continue with core business than engage a giant like Microsoft in years of battles in court and damage the business in the process.

The problem is actually less to do with FOSS as such and more to do with the poor state of software patent law in the USA. Currently in the European Union (EU) software patents are not binding but there is a constant threat that the EU will follow the U.S. route, so these issues make important lessons. That Microsoft is waging its battle against FOSS is not surprising, as business and the IT industry on the whole are continuing to function well with the new software paradigm of FOSS, and thus threaten Microsoft monopolies.

Industry in the USA has learned to live with software patents. The most common practice is for corporations to cross-license patents; without such agreements business would literally grind to a halt. FOSS has a 'none' or anti-software patent position (depending on the license) that precludes it from such deals. In the past, corporate supporters of FOSS have sprung to its defense (e.g., the SCO versus IBM case) when it has been threatened, and we can expect similar defensive actions should Microsoft actually take any FOSS user to court over the alleged 235 patent infringements.

In a paradoxical way, it is good that Microsoft's licensing logic is continuing its inevitable momentum because it (hopefully) will put an end to the innuendoes and hints that FOSS, and Linux in particular, are breaking patent laws - the issue needs to be aired and resolved.

If the issue goes to court then it is impossible to call at this stage who might win, simply because court outcomes may rest on obscure technicalities that no one can predict. If the loser is the USA's software patent system and results in a major overhaul then that would be a good thing. ENS