Novell Goes Public with MS Patent Agreement Documents

In the 10-K filing, Novell said, "the overarching purpose of this partnership [with Microsoft] is to increase the utility, desirability and penetration of Linux by enabling its interoperation with Windows to a mixed environment that is easier to maintain. We believe that this partnership will help us deliver value to customers by giving them greater flexibility and effectiveness in their IT environments."

To read more about how Microsoft and Novell made peace over Linux, click here.

The Microsoft partnership essentially consists of three related agreements: the technical collaboration agreement, primarily in the areas of virtualization, Web services management, directory interoperability and document format compatibility; a business collaboration agreement based around joint sales and marketing activities; and a patent cooperation agreement.

"We believe that this partnership addresses pressing, industrywide issues, that it puts customers needs first, and that our company will benefit from it financially and strategically," Novell said in the report.

Novell described the market for identity-driven computing solutions and Linux and platform services solutions as highly competitive and subject to rapid technological change. "We expect competition to continue to increase both from existing competitors and new market entrants," it said in the 10-K filing.

However, the company also acknowledged the threat posed by Microsoft. "One pervasive factor facing us and all companies doing business in our industry is the presence—and dominance—of Microsoft … We will continue to be competitors of Microsoft, but it is our goal that through this set of agreements, Microsoft will serve as an important indirect source of channel sales for Novells Linux sales," the company said.

Regarding copyrights, licensing, patents and trademarks, Novell said its business includes a mix of proprietary offerings and offerings based on open-source technologies.

"With respect to proprietary offerings, we perform the majority of our development efforts internally, but we also acquire and license technologies from third parties. No one license is critical to our business. Our open-source offerings are primarily [composed] of open-source components developed by independent third parties over whom we exercise no control," the company said in its filing.

Dell plans to partner with Microsoft and Novell on interoperability. To read more, click here.

But Novell also recognized the potential harmful effects to its business if it lost access to third-party open-source technology.

"The collective licenses to those open-source technologies are critical to our business. If we are unable to maintain licenses to these third-party open-source materials, our distribution of relevant offerings may be delayed until we are able to develop, license or acquire replacement technologies. Such a delay could have a material adverse impact on our business."

The company also said current trends indicate that the frequent litigation in the software industry regarding patent, copyright and other intellectual property rights might increase.

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