Software Wars, Business Strategies and IP Litigation

Immediately after Oracle America filed a patent infringement suit against Inc. in August 2010 the trade press labelled this a “software war.” Their interest was a trial featuring Oracle’s “star” counsel David Boies. In mid-January often cited Florian Mueller of NoSoftwarePatents, wrote “Google is patently too weak to protect Android—Google’s cell phone software.”1 (On April 4 Lead bidder Google offered $900 million for Nortel’s 6,000 patents and applications. A decision is expected in June}. By the end of March he had counted 39 patent infringement suits against Google.2 Whether Oracle wins Oracle v Google or not, Oracle and IBM may become losers.

It is important that Oracle not alienate the software development community or its customers as it attempts to monetise the assets from the —now Oracle America— acquisition. The Oracle v. Google complaint was carefully targeted at Google’s Android software, avoiding the appearance of monetising the Java language and platform itself.

The Android software was developed as open source in conjunction with the . Android's mobile operating system is based on a modified version of the kernel, subject to Linux patents. Google published all of the computer code under an Apache Software Foundation License.3 This license is royalty-free and places no restrictions on derivative products or commercial use. Based on IDC market share estimates by the fourth quarter of 2010, Android phones had 39% of the market.

An Oracle asset gained through the acquisition of Sun was the OpenOffice open-source software—one of the only remaining substantial “competitors” to ’s document processing applications. On September 27, 2010 most of the OpenOffice developers left the product and joined the new Document Foundation, headquartered in Munich and Berlin, in Germany, spawning a competitor piece of software called LibreOffice. The Foundation was immediately supported by Google, , and . LibreOffice’s first release was made on January 25, 2011.

Oracle’s Larry Ellison had commented Oracle would be providing OpenOffice in the Cloud. Oracle can still do that using either OpenOffice or LibreOffice, but now does not have any control over the LibreOffice product or any of the developers that left OpenOffice project. Moreover, LibreOffice is now covered by European and German, rather than U.S. law.

Oracle America also maintains and supports the MySQL management system; a potential competitor with Oracle’s product. MySQL had always had two versions. One unsupported open source version available at no cost, and another that included technical support and some additional features. Before Sun Microsystems acquired the Swedish firm in 2008, Oracle competitor SAP had donated its own database software to MySQL. SAP’s 27 May 2003 press release said: “Beginning in Q4 2003, SAP DB will be marketed as a MySQL brand. With this cooperation, MySQL AB plans to become a

Jim Farmer 1 11 April 2011 Revised 13 April 2011 References added 16 April 2011

recognized global technology partner of SAP AG.” Oracle’s acquisition of MySQL now threatens SAP AG.

In early November 2010 the Oracle product sheets showed the InnoDB engine was not included in the royalty free classic version. Oracle’s 10 November 2010 press release said: “The confusion about whether MySQL Community Edition still included InnoDB seems now to have dissipated. Thank you to Sheeri Cabral, Darren Cassar and all of you who helped correct the misperception created by catchy headlines”4 However both the earlier and revised product sheets are available.5

How did IBM become involved?

On October 12, 2010 Oracle released a press release titled “Oracle and IBM Collaborate to Accelerate Java Innovation Through OpenJDK,”

“Oracle and IBM today announced that the companies will collaborate to allow developers and customers to build and innovate based on existing Java investments and the OpenJDK reference implementation. Specifically, the companies will collaborate in the OpenJDK community to develop the leading open source Java environment.”

There was no announcement from IBM.

IBM has had a long and productive relationship with open-source communities. In establishing the Apache Foundation 1999, IBM legal staff spent more than a year obtaining agreements with every contributor to Apache’s software to ensure no contributor could claim rights to Apache open source products. Their contributor agreements continue to be used in most open-source products. IBM legal staff also prepared the Apache software license. Unlike the GNU Public Licesne [GPL], derivative products can be made without any requirement that changes be made public as required by the GPL. IBM also assisted in finding collaborators contributing to the Apache Foundation. The Apache HTTP Server began as a reference implementation of the HTTP (HyperText Transfer Protocol) specification. The Apache HTTP Server now dominates use in the World Wide Web—60% of Web sites—and is also a major part of many commercial software products.

In 2000 IBM helped to organize and sponsored the Open Source Development Laboratories [OSDL] that led Linux development and maintenance. was the first OSDL fellow. In 2005 after a merger it became the .

In 2004 IBM helped organize the Foundation and donated their Eclipse software product to the Foundation. Eclipse is a software development environment comprising an integrated development environment (IDE) and an extensible plug-in system. It is written mostly in Java and can be used to develop applications in Java. Hundreds of open source and commercial “plug-ins” are available. Eclipse is licensed under the Eclipse Public License. The receiver of EPL-licensed programs can use, modify, copy and distribute the Jim Farmer 2 11 April 2011 Revised 13 April 2011 References added 16 April 2011

work and modified versions, in some cases being obligated to release their own changes.6 Recognizing the complexities of patent litigation, IBM now uses the EPL rather than their more restrictive .

In 2005 IBM helped organize the Open Invention Network, founded by IBM, , Philips, Red Hat, and . NEC subsequently became a member. OIN is a company that acquires patents and licenses them, royalty free, to entities which, in turn, agree not to assert their own patents against Linux and Linux-related systems and applications. Oracle and Google subsequently joined OIN.7

OIN offers and sponsors free services that eliminate low-quality patents through re- examination. Their “Linux Defenders” program enables and encourages contribution to defensive publications covering inventions that have not previously been patented and solicits prior art contributions to assist patent examiners be aware of the prior art. This continues efforts begun under the OSDL’s Patent Commons Project.

In addition to these efforts to support the open-source community, IBM frequently donates software to the open source communities. IBM staff are assigned to develop software in these organizations. (Surveys suggest most contributors to open source are either employed and assigned as developers to these software projects or are faculty and staff at colleges and universities that contribute as a way of advancing knowledge).

IBM is a consistent participant in the development of specifications for subsequent standardization. IBM also has strongly support training and education, and college and university research projects. IBM has found both working with the open-source community and developing commercial products and services.

It is important for IBM to retain its deserved reputation for its productive relationship with the open-source software communities. But the agreement with Oracle may damage IBM’s reputation in the Java developer community and effect subsequent revenue.

Writing in ars technica, Ryan Paul reported:

The Harmony project, which is developed by the Apache Software Foundation, offers an open source Java runtime that is distributed under the permissive Apache license. Sun's controversial refusal to provide critical Java compatibility tests under licensing terms that were suitable for the Harmony project created a divisive feud that polarized major Java stakeholders.

“Sun's position on the issue conflicted with a policy established in 2006 through the Java Community Process (JCP)—the official Java governance body—which affirmed that the licensing terms of the compatibility tests would not preclude third-party open source implementations. Although Sun was contractually bound by the Java Specification Participation Agreement to follow through with the commitment embodied by that policy, the company failed to do so. Sun wanted Jim Farmer 3 11 April 2011 Revised 13 April 2011 References added 16 April 2011

the test suite license to limit fields of use, a restriction that is unambiguously antithetical to open-source licensing.

“Without access to the test suite, the Harmony developers were not able to certify their implementation's conformance with the Java standard, thus creating the risk of fragmentation. Commercial Java adopters who favour permissive licensing were supportive of Harmony, but were unable to compel Sun to provide access to the compatibility tests under appropriate licensing terms.”8

Bob Sutor, IBM's head of Linux and open source, described the reasoning behind IBM’s decision in a very frank blog entry.

He wrote:

“Prior to acquiring Sun, Oracle was one of several companies that sided with Harmony and called for the test suite to be made available under suitable terms, as stipulated by the JCP policy. Oracle reversed its position, however, after completing its acquisition of Sun. Like Sun, Oracle intends to exercise its control over the test suite licensing in a manner that will drive open source Java adopters towards OpenJDK, the implementation that it controls.”

It was unlikely that IBM or the Apache Software Foundation would attempt to enforce the agreement. It is not clear how this will be interpreted by the Java developer community or current users.

Sutor’s public comment was unusually strong. Likely IBM’s action will be interpreted, however unfair, as weakness even though it is a rational business choice.

Does this matter?

In 2007 the Harvard Business Review included London-based Karen Fraser’s “Conflicted Consumers” as one of the “Breakthrough Ideas.”9 She writes:

“Your data indicate strong customer satisfaction: Repeat purchase levels are high, and many customers have been with you for years. Good news, right? Well, appearances can be deceptive.

“There may well lie buried in these data a “stealth” segment of apparently loyal customers who have ethical concerns about your company and are poised to switch as soon as a viable alternative emerges.”

A frequent corporate goal—easy to achieve in software—is to “lock in” customers so the cost of changing suppliers is so high that customers will continue to use the product or service even if there is a better alternative. Until … Think of how rapidly Linux displaced the various operating systems and how effective it challenged Microsoft in data centres. Oracle,

Jim Farmer 4 11 April 2011 Revised 13 April 2011 References added 16 April 2011

IBM, Microsoft, Apple and Google should not rely on the loyalty of current customers, but consider how the un-measurable “conflicted consumers” could shift to another supplier.

On October 12, 2010 Oracle America amended its complaint expanding Count VIII Copyright Infringement. Copyright infringement has advantages over patent infringement. Copyright is less difficult to litigate. International enforcement may be more effective since software patents are not always found in non-U.S. countries.

There is an alternative for Oracle America, not yet included in litigation—the terms and conditions of the software licenses. Sun was conflicted between an “open-source” process and license and one which prevents users of the software from “forking” the software—that is modifying the same code, but retaining similar functionality and beginning a competitive distribution. This conflict is evident from Sun’s licensing practices. Software often has software components with different licenses. As an example when the Sakai learning management system—an open-source package used by research universities for instruction— was audited, there were 33 different licenses in the source code. Nine conflicted with the intended license and two could not be used at all. This result is typical of an Intellectual Property Risk Audit.

Open Source Risk Management in Durham, North Carolina is an example of a firm that does IP Risk Audits, especially for mergers and acquisitions. In 2004 offered OSRM also offered insurance for open source software that would defend against patent infringement and license violations. However the volume of insurance was small enough the underwriter, Kiln plc in London, discontinued the product. The software wars may create a new and viable market for such insurance coverage.

There was another related event. On November 22, 2010 Attachmate purchased Novell. As part of the purchase agreement 882 of the Novell software patents were sold to CPTN Holdings LLC. In a 9 December filing with the German federal antitrust authority the participants were Microsoft, Apple, Oracle and EMC. The move was described as “defensive.” The sale price was US$450 million; an average price of US$510,000 per patent Since Google uses Linux, the owners now have additional patents that could be enforced against Google.

What are the lessons from these events?

• Because of externalities, the choice of litigation options is part of a business strategy. This suggests IP attorneys should be part of all related business strategy discussions. It is helpful to have the likely outcomes of various intellectual property enforcement options identified, and probabilities of success estimated. The options that mitigate community reaction can be based on historical experience, though that has not yet been an area of academic research and little data is available.

• Game the opposition’s litigation in the larger context of the industry, not just current litigation. Monitor their actions constantly and carefully. The cited events are examples of what may occur during any IP litigation that impacts an industry.

Jim Farmer 5 11 April 2011 Revised 13 April 2011 References added 16 April 2011

• Focus on prior art. About 25% of U.S. re-examined patents are invalidated.

These actions are primarily applicable to United States litigation where there are a large number of software patents. The same broader considerations may apply to other industries. In Europe these actions often are considered for antitrust.

The availability and use of prior art may become be sharply increased through new technology. Google is clearly in the lead. Now Google has a special search that uses the data elements in the application as well as the full text. Already Google is a much better source than the USPTO. Google Scholar can be used to search the academic literature as well. Here references and citations can be used to develop a “genealogy of knowledge.” Similar and search tools are becoming available in European universities and could be used similarly in intellectual property litigation.

Google has actions it can take:

• Google could begin a mass re-examination of patents, not just the seven. This becomes an offense diluting other patent portfolios and their value.

• Google has already created two computer languages—Simple and Go. Google could fork. James Gosling, inventor of Java and now a Google employee, could lead a replacement for the Java language that incorporates all of the improvements he would like to make from the 16 years since Java was introduced and since multicore computers are common.

Google CEO has the knowledge, resources and leadership. His loyalty to the academic community may lead him to take such an alternative.

1 Florian Mueller. ( 2011, 19 January) Google is patently too weak, FOSS Patents. 2 Mueller. (2011, 31 March) Android patent suit no. 38. 3 Apache Software Foundation. (2004, January) Software License Version 2.0 4 Kumar, Monica. (2010, 10 November). Get The Facts: MySQL Licensing and Pricing. . 5 Debjit (2010, 5 November). InnoDB Storage Engine Dropped digitizor. 6 Wikipedia. (2011, 4 April) Eclipse Foundation. 7 Open Invention Network. (2011, 4 April). About OIN. 8 Paul, Ryan. (2010, 13 October) Java Wars: … Oracle shuns Apache Harmony ars technica.. 9 Fraser, Karen. (2007, February). The Breakthrough List Harvard Business Review.

Jim Farmer 6 11 April 2011 Revised 13 April 2011 References added 16 April 2011

Editor’s comments: email Catherine White to Jim Farmer “Re: Article – Jim Farmer,” 12 April 2011 5:38 A.M. London time GMT+1.

Dear Jim,

Thank you for your article.

I have changed one paragraph in your article - it is the Bob Sutor paragraph:

Bob Sutor, IBM's head of Linux and open source, described the reasoning behind IBM's decision in a very frank blog entry. He wrote: "Prior to acquiring Sun, Oracle was one of several companies that sided with Harmony and called for the test suite to be made available under suitable terms, as stipulated by the JCP policy. Oracle reversed its position, however, after completing its acquisition of Sun. Like Sun, Oracle intends to exercise its control over the test suite licensing in a manner that will drive open source Java adopters towards OpenJDK, the implementation that it controls."

I've changed it to:

Bob Sutor, IBM's head of Linux and open source, described the reasoning behind IBM's decision in a very frank blog entry. He wrote, "It became clear to us that first Sun and then Oracle were never planning to make the important test and certification tests for Java, the Java SE TCK, available to Apache. We disagreed with this choice, but it was not ours to make. So rather than continue to drive Harmony as an unofficial and uncertified Java effort, we decided to shift direction and put our efforts into OpenJDK. Our involvement will not be casual as we plan to hold leadership positions."

I've changed it because the paragraph you used was from Ryan Paul's page - I couldn't find it on Bob's blog so this may have confused our audience. The paragraph I've changed it to is on Bob's blog and I think is similar enough to your paragraph. I have of course referenced it also.

I hope this is OK. Let me know if this is a problem.

Thank you Jim.

Best,

Catherine White Staff Writer & Assistant-Editor

Ph: +44(0)20 3377 3834

Jim Farmer 7 11 April 2011 Revised 13 April 2011 References added 16 April 2011

www.intellectualpropertymagazine.com

Informa Business Information 69-77 Paul St 52 Vanderbilt Avenue London EC2A 4LQ New York NY 10017 UK USA

Informa Law and Informa Business Information are trading names of Informa UK Limited. Registered in England under no 1072954. Registered Office: Mortimer House, 37-41 Mortimer St, London W1T 3JH

Jim Farmer 8 11 April 2011 Revised 13 April 2011 References added 16 April 2011

Other email

4/12/2011 7:59 PM from Jim Farmer subject Revision?- Jim Farmer to Catherine White

While working on the references today I found two references to Google's 4 April bid for 6,000 Nortel patents.

To show currency you may want to include a note in the article. Enclosed are the two references and a suggested location and text that you may want to consider.

Sorry about this; I didn't see this when I read last week. jim

Suggested Revision Software Wars, Business Strategies and IP Litigation First paragraph Immediately after Oracle America filed a patent infringement suit against Google Inc. in August 2010 the trade press labelled this a “software war.” Their interest was a trial featuring Oracle’s “star” counsel David Boies. In mid-January often cited Florian Mueller of NoSoftwarePatents, wrote “Google is patently too weak to protect Android—Google’s cell phone software.”9 (On April 4 Lead bidder Google offered $900 million for Nortel’s 6,000 patents and applications. A decision is expected in June}. By the end of March he had counted 39 patent infringement suits against Google.9 Whether Oracle wins Oracle v Google or not, Oracle and IBM may become losers.

1 Florian Mueller. ( 2011, 19 January) Google is patently too weak, FOSS Parents. 2 Mueller. (2011, 31 March) Android parent suit no. 38.

4/13/2011 5:00AM

Jim Farmer 9 11 April 2011 Revised 13 April 2011 References added 16 April 2011

from White Catherine subject RE: Revision? – Jim Farmer to: Jim Farmer

Dear Jim,

Thank you for the revision. That is absolutely fine, I've added it into your article where you suggested.

It has now gone to the design production department for lay out.

Thank you and best,

Catherine White Staff Writer & Assistant-Editor

Ph: +44(0)20 3377 3834 www.intellectualpropertymagazine.com

Informa Business Information 69-77 Paul St 52 Vanderbilt Avenue London EC2A 4LQ New York NY 10017 UK USA

Informa Law and Informa Business Information are trading names of Informa UK Limited. Registered in England under no 1072954. Registered Office: Mortimer House, 37-41 Mortimer St, London W1T 3JH

Jim Farmer 10 11 April 2011 Revised 13 April 2011 References added 16 April 2011

References

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LinuxInsider. Henschen, Doug. (2010, February 12). SAP At A Crossroads. Manhasset NY US: Information Week. Hogg, Matthew. (2005, December 2). Kiln Open Source Compliance representation and warranty insurance. London UK: R J Kiln & Co Limited. im+m (ed). (2011, January 31). Wikipedia Topic - Patent, Intellectual property law [assembled entries]. Denver CO US: instructional media + magic inc. Kirk, Jeremy. (2010, September 28). Update: OpenOffice.org developers move to break ties with Oracle. ComputerWorld. Linux Defenders. (2011, February 12). Peer-to-Patent, Post-Issue Peer-to-Patent, Defensive Publications. Durham NC US: Open Invention Network LLC. McAllister, Neil. (2010, November 11). The coming war over the future of Java. InfoWorld. Metz, Cade. (2011, February 17). Google asks US Patent Office to rethink Oracle Java patents. The Register. Miller, Claire Cain. (2011, April 4). Google Bids $900 Million for Nortel Patent Assets. The New York Times, B3 [5 April]. New York NY US. Mueller, Florian. (2010a, August 13). Oracle sues Google, says Android infringes seven Java patents (plus unspecified copyrights). FOSS Patents. Mueller, Florian. (2010b, August 16). Oracle vs. Google licensing issues. FOSS Patents. Mueller, Florian. (2010c, August 18). The two faces of the mainframe: different economics for legacy and new workloads. FOSS Patents. Mueller, Florian. (2010d, August 21). The Open Invention Network (OIN): Oracle vs. Google is its biggest debacle so far. FOSS Patents. Mueller, Florian. (2010e, October 26). Digital security company Gemalto sues Google, Samsung,Motorola and HTC over Android’s application platform and development tools. FOSS Patents. Mueller, Florian. (2010f, November 25). Attachmate, Novell and the sale of 882 patents to CPTN Holdings, a consortium organized by Microsoft. FOSS Patents. Mueller, Florian. (2010g, December 16). CPTN Holdings LLC (acquirer of 882 Novell patents): Microsoft, Apple, EMC and Oracle are the partners according to German antitrust notification. FOSS Patents. Mueller, Florian. (2011a, January 19). Google is patently too weak to protect Android. FOSS Patents. Mueller, Florian. (2011b, February 18). Skyhook vs. Google: a defence of open source principles? FOSS Patents. Mueller, Florian. (2011c, March 22). Microsoft and Google jointly sue GeoTag Inc. in Jim Farmer 12 11 April 2011 Revised 13 April 2011 References added 16 April 2011

Wayner, Peter. (2010, April 13). The future of MySQL according to Oracle. InfoWorld. Wikipedia. (2009, August 30). IBM Technical Disclosure Bulletin. San Francisco CA US: Wikimedia Foundation Inc. Wikipedia. (2010, September 23). Software patents under United Kingdom patentlaw. San Francisco CA US: Wikimedia Foundation Inc. Wikipedia. (2011a, January 4). Berkeley DB [Sleepy Cat database management system]. San Franciso CA US: Wikimedia Foundation Inc. Wikipedia. (2011b, Janury 15). Java (software platform). San Francisco CA US: Wikimedia Foundation Inc. Wikipedia. (2011c, February 8). Java Virtual Machine. San Francisco CA US: Wikimedia Foundation Inc. Wikipedia. (2011d, February 9). Java Platform, Micro Edition. San Francisco CA US: Wikimedia Foundation Inc. Wikipedia. (2011e, February 13). Java (programming language). San Francisco CA US: Wikimedia Foundation Inc. Wikipedia. (2011f, February 13). Java (software platform). San Francisco CA US: Wikimedia Foundation Inc. Wikipedia. (2011g, March 9). Apache HTT Server. San Francisco CA US: Wikimedia Foundation Inc. Wikipedia. (2011f, March 10). Apache Software Foundation. San Francisco CA US Wikimedia Foundation Inc. Womack, Brian. (2011, April 4). Google Offers $900 Million for Nortel s WirelessPatents as Lead Bidder. Bloomberg.

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