Novell to make 'running royalty payments' to Microsoft

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Todd Bishop's Microsoft Blog

« Microsoft, Novell in Linux partnership | Main | Gates, Ballmer to testify in antitrust case »

Novell to make 'running royalty payments' to Microsoft

Deep in the news release about Microsoft's newly announced partnership with Novell is one particularly noteworthy element of the agreement that hasn't been getting a lot of attention (emphasis added):

Under the patent cooperation agreement, both companies will make upfront payments in exchange for a release from any potential liability for use of each other's patented intellectual property, with a net balancing payment from Microsoft to Novell reflecting the larger applicable volume of Microsoft's product shipments. Novell will also make running royalty payments based on a percentage of its revenues from open source products.

Who would have imagined Microsoft receiving royalty payments from a Linux vendor based on the ongoing sale of its open-source products? It could have been one of the main incentives for Microsoft to make the broader agreement -- which, on the flip side, will have Microsoft's sales force promoting Novell's Suse Linux to business customers that decide to go the Linux route.

The companies didn't disclose any financial terms of their deal, but it will be worth watching future financial statements and regulatory filings from both for any indication of how large those payments will be. On the other hand, neither Microsoft nor Novell made any filings about the agreement with the SEC today, as they would if it were material to their financial results.

Posted by at November 2, 2006 7:52 p.m.

Comments

#15690

Posted by unregistered user at 11/3/06 7:36 a.m.

... a net balancing payment from Microsoft to Novell...

MS gives Novell money, so Novell can pay MS back and MS can claim they have valuable patents. MS just invested in annuity from Novell. MS has enough money, they can afford to buy some more FUD.

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#15754

Posted by unregistered user at 11/4/06 3:21 a.m.

Novell also has a very extensive patent portfolio that they are interested in protecting. If Microsoft doesn't play nice there's always the existing lawsuit for Novell to hang over their heads.

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#15793

Posted by unregistered user at 11/5/06 12:12 p.m.

Novell is the next IBM OS/2. IBM had TONS of patents to hold over the head of Microsoft, valid or invalid. Didn't happen. Microsoft, as we all know, won that "partnership", which admittedly IBM did botch on the marketing side. But Microsoft's FUD machine nonetheless played the major role here. It'll be the same with Novell.

And as for Novell holding software patents over the head of Microsoft, I rather think it was the reverse. Novell bought Ximian, which started Mono (basically .NET for Linux). It is far more likely that Microsoft has software patents on Mono. I hope Miguel de Icaza has learned his lesson now.

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