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Patents

Justice Department Approves Patent Acquisition with Conditions to Ensure Competition

Strategic Insights

— 2 min read

The United States Department of Justice announced that CPTN Holdings LLC, a consortium of Microsoft, Oracle, Apple, and EMC, will be allowed to acquire patents from Novell Inc. in a two-stage transaction, provided that changes are made to address competition concerns. The deal, which would have originally harmed the ability of open source software, such as Linux, to innovate and compete, has been revised to ensure continued competition.

The department will continue to investigate the distribution of patents to ensure that the acquisition does not stifle innovation and competition in the open source software community. The changes made to the agreement include Microsoft selling back to Attachmate all of the Novell patents that it would have otherwise acquired, and EMC not acquiring 33 Novell patents and patent applications related to virtualization software.

Key Takeaways:

  • The Justice Department has approved the acquisition of patents from Novell Inc. by CPTN Holdings LLC, a consortium of Microsoft, Oracle, Apple, and EMC.
  • The deal was originally proposed to harm the ability of open source software, such as Linux, to innovate and compete.
  • The changes made to the agreement include Microsoft selling back to Attachmate all of the Novell patents that it would have otherwise acquired, and EMC not acquiring 33 Novell patents and patent applications related to virtualization software.
  • The department will continue to investigate the distribution of patents to ensure that the acquisition does not stifle innovation and competition in the open source software community.
  • CPTN Holdings LLC has revised its formation agreements to acquire approximately 882 patents and patent applications from Novell.
  • The agreement provides that all of the Novell patents will be acquired subject to the GNU General Public License, Version 2, and the Open Invention Network (OIN) License.
  • CPTN does not have the right to limit which of the patents, if any, are available under the OIN license.
  • Both the United States Justice Department and Germany's Federal Cartel Office (Das Bundeskartellamt) cooperated closely on this investigation.

Statistics:

  • Novell Inc. had 2010 revenues of approximately $812 million.
  • Microsoft Inc. had 2010 revenues of approximately $62.5 billion.
  • Oracle Corp. had 2010 revenues of nearly $27 billion.
  • Apple Inc. had 2010 revenues of more than $65 billion.
  • EMC Corp. had 2010 revenues of approximately $17 billion.
  • The deal involves the acquisition of approximately 882 patents and patent applications from Novell.
  • The changes made to the agreement include Microsoft selling back to Attachmate all of the Novell patents that it would have otherwise acquired, and EMC not acquiring 33 Novell patents and patent applications related to virtualization software.

Sources:

  • United States Department of Justice press release (no date provided)
  • Germany's Federal Cartel Office (Das Bundeskartellamt) (no date provided)
  • Novell Inc. 2010 annual report (2010)
  • Microsoft Inc. 2010 annual report (2010)
  • Oracle Corp. 2010 annual report (2010)
  • Apple Inc. 2010 annual report (2010)
  • EMC Corp. 2010 annual report (2010)

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