Novell to spill beans on Microsoft patent pact

Novell will share details of its patent pact with Microsoft this month in a regulatory filing that had been delayed by a stock option investigation.

Novell plans to reveal the details in conjunction with filing its upcoming annual report with the US Securities and Exchange Commission (SEC), according to a spokesman. The report had been held up by Novell's investigation into its stock option compensation practices.

Speaking at the Open Source Business Conference in San Francisco, the spokesman said: "We will be filing our SEC filing by the end of this month. We will be publishing the Microsoft agreements as attachments." The agreements will have some details redacted, he added.

You what…?

Bust through tech jargon with silicon.com's Cheat Sheets.

The details are at the heart of a controversial patent partnership Novell and Microsoft announced in November. Under the pact, Microsoft agreed to sell coupons entitling customers to use Novell's Suse Linux Enterprise Server without fear of a patent infringement suit from Microsoft. The partnership also involves interoperability work in directory software, office document formats and virtualisation software.

Novell faced criticism from open source advocates - Red Hat attorney Mark Webbink called it "appeasement", for example - and it spawned open source licensing work that could prohibit some such deals in the future. And the controversy took on a new dimension when Microsoft said last week it believes Linux and other open source software infringes 235 of its own patents.

Microsoft's patent tally news both pleased and displeased Novell, said Justin Steinman, the company's marketing director for Linux.

On the one hand, Novell saw the news as "another round of, 'oh no, here we go again'. We generally think comments like that aren't productive", Steinman said.

But on the other, Novell can potentially profit from the sabre-rattling. Steinman said: "If Microsoft is going to go out and raise concerns, we are comfortable we can offer [customers] coverage." Overall, though, Novell wasn't pleased. "Do we wish the tone of the article had been different? I think so," he said.

The financial effect has been notable. Steinman said: "Microsoft is Novell's number one [sales] channel in the first quarter of 2007."

One developer who's offended is Jonathan Corbet, a Linux kernel programmer and executive editor of LWN.net. During the panel discussion, he said Novell has effectively legitimised accusations of open source code impurity.

Corbet said: "We are proud about the quality of our code. If Novell comes along and says my code is not mine and cannot be distributed without paying a tax to Microsoft, I feel I have been called a thief. It is divisive to the community."

Regarding Novell's stock option situation, the review "did not find any evidence of intentional wrongdoing by any former or current Novell employees, officers or directors", Novell said in a statement.

The review found Novell didn't report $19m in compensation expenses from fiscal 1997 through 2005, the company said. However, because the amounts weren't materially significant during the related periods, it won't restate its earlier financial results.

Stephen Shankland writes for CNET News.com