Novell Acquires Valuable B2B, Web Services Patents

The Linux company says it will use Commerce One's important B2B patents to defend its open-source programs.

It has been revealed that Novell picked up 39 important business-to-business electronic commerce and Web services patents from bankrupt Commerce One recently, and the company has declared its intention to use them to protect its open-source offerings.

The sale of Commerce One Inc.s 39 Web services patents went to a mysterious high bidder, JGR Acquisition Inc., for $15.5 million, in a December auction at the Bankruptcy Court for the Northern District of California in San Francisco.

The patents, which amounted to seven actual patents and 32 patent applications, include technology that broadly describes the framework for B2B using XML, the language family behind Web services.

Specifically, this IP (intellectual property) is the foundation for the important xCBL (XML Common Business Library) and OASIS (Organization for the Advancement of Structured Information Standards) UBL (Universal Business Language) standards.

Commerce One had planned to use this IP to create an open enterprise hub that customers could utilize to connect and adapt applications, using Web services to support changing business processes. Aggressive competition from Microsoft Corp. and SAP AG scuttled those plans.

At the time of the transaction, some Web services companies feared that the new patent owner could use the patents for financial gain, rather than to create technological advances.

"These patents, in the wrong hands, would be used to shake down any companies that operate in Web services and use standards," said Jason Schultz, patent attorney with the Electronic Frontier Organization, at the time.

The fear was that an aggressive owner of the patents could go "door-to-door" with infringement lawsuits, Schultz said.

The runner-up in the patent auction was Intellectual Ventures LLC, a company run by former Microsoft executive Nathan Myhrvold. Critics of Intellectual Ventures and other companies that are buying patents fear that such businesses will stifle innovation and charge excessive fees for their IP.

To prevent the patents from being used against existing users, there was an attempt by the e-commerce open standards consortium CommerceNet to acquire the patents and retire them. These efforts came to naught.

Now, however, since its been revealed that Novell Inc. owns the patents, it appears as though the patent users will have relatively little to worry about.

Bruce Lowry, Novells director of PR, indicated that Novell has acquired the patents for defensive purposes and doesnt plan to use them for licensing revenue.

As for open source, "We have a stated policy that we will use our patents to defend our open-source offerings against potential patent challenges by others," Lowry said. "The acquisition of the Commerce One patents strengthens our ability to do so."

/zimages/2/28571.gifClick here to read more about Novells plans for open-source patents.

Novells specific plans for how it will deploy these, or other, patents for open source are still in flux, Lowry said. "We clearly are a believer in open source, and we are always considering alternative ways to promote open source. But I cant speculate at this stage on specific future actions we might take around patents," he said.

Dan Ravicher, the Public Patent Foundations executive director, said he isnt worried about Novells ownership of the patents.

"In my opinion, Novell has never given anyone a reason to doubt their veracity or strategy vis-à-vis open source," Ravicher said.

But he also fears that Novell owning the patents wont do much to protect open source from frivolous abuses of patent law, Ravicher said, adding, "As far as using them to defend open-source software from patent challenges by others, acquiring a few patents here or there at most gives them retaliatory claims against a fellow commercial actor. It does nothing to disincentivize a patent troll [a company that acquires a patent specifically to sue other businesses for infringing on the purchased patent]."

/zimages/2/28571.gifAn ACT panel on intellectual property tackles the issue of patents. Click here to read more.

Others express concern about how Novells purchase highlights the problems with todays patent system.

"While Im pleased that these patents will be used to defend open source," said Lawrence Rosen, a founding partner of the IP law firm Rosenlaw & Einschlag, "this story demonstrates how broken our patent system is."

"Rather than encourage innovation and foster technological advances, these patents are being treated like commodities, the pork bellies and soybeans of our advanced commerce," Rosen said. "I agree with Robert Glushko, one of the inventors [of two of the B2B XML patents], that the patent system needs reform to prevent anti-innovative and anticompetitive acquisitions of patents."

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