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May 14, 2007 5:22 PM

Microsoft's Open Letter to Open Source



Microsoft's epic battle with free software didn't start yesterday, or in 2004, but more than 30 years past when young geek Bill Gates laid the foundation for the company's business philosophy. The approach is fundamentally incongruent with open source.

People sometimes forget—or maybe they don't know—that Microsoft founder Gates is a lawyer's son. As such, Microsoft's business is very much, maybe all, about legal contracts.

What is a Microsoft software license? It's a contract, and a crafty one at that. Microsoft agrees to let you, the buyer of its software, use it on a perpetual basis. Microsoft retains full ownership of the software, granting you only rights to use its stuff.

Microsoft retains rights but not responsibility. The contract abdicates Microsoft of any obligation or responsibility for any damages or loss of revenue caused by the software.

The contractual approach underlines a fundamental philosophical attitude about ownership: If I create it, it's mine. Gates makes this position absolutely clear in the infamous, but sometimes forgotten, "An Open Letter to Hobbyists." In the 1976 document, Gates wrote:

"As the majority of hobbyists must be aware, most of you steal your software. Hardware must be paid for, but software is something to share. Who cares if the people who worked on it get paid?...There is very little incentive to make this software available to hobbyists. Most directly, the thing you do is theft."

The attitude about ownership and who gets paid is a persistent Microsoft cultural ethic, as seen in March statements about Google and copyrights.

A 30-Year Position
Yesterday's Fortune story, where Microsoft General Counsel Brad Smith claimed that open source software violates 235 of the company's software patents, is another open letter. Gates made clear his position 31 years ago, and he put other software developers on notice: Don't use my stuff, unless you pay for it. Similarly, Smith has essentially restated the same position, and issued warning to open source developers, their customers and community drafting GPLv3: You must license our stuff.

Open Letters

From Microsoft's perspective, the warning is more than justified. The company has always licensed its technology on its own terms, using innovation as a market differentiator. Microsoft is a stingy licensor. The company generally only licenses its stuff when there is direct benefit. Microsoft's longstanding licensing efforts are for OEM distribution, for ISVs (software developers) and for branding. During this century, Microsoft has expanded what it calls interoperability licensing around formats, protocols and standards; related are cross-licensing of patents and Shared Source, which is Microsoft's limited response to open source. These programs all derive some direct benefit to other Microsoft technologies.

More recently, Microsoft has licensed some castoff technologies through its IP Ventures program. It's one of the few areas of licensing where Microsoft seeks to directly profit from its intellectual property licensed to discreet third parties. However, contrary to Microsoft PR propaganda, the company has not opened up the IP Pandora's Box. Microsoft doesn't treat IP licensing as its own revenue stream, the way IBM does. Microsoft retains tight control over most of its intellectual property.

Microsoft's corporate behavior, with respect to this cultural ownership attitude, is fairly consistent. Again, Microsoft control underlines this sense of ownership. The company is often as serious about keeping to contracts it signs as it expects third parties to do the same. However, as seen from Microsoft's 1995 agreement with the U.S. Justice Department, the company is quick to reinterpret ambiguity to its advantage, sometimes to a fault. Microsoft's interpretation of the 1995 consent decree led to further litigation in 1997 and the landmark antitrust case that Microsoft lost in 2000.

Attacking a Messy Problem
Open source is messy business for Microsoft and about to get messier because of GPLv3. The problems, as I believe Microsoft sees them:

  • Open source is based on the concept of community ownership and intellectual property free of any single company's control.
  • The GPL creates opportunity for third parties to use, without offering fair compensation, intellectual property developed by commercial developers like Microsoft.
  • Open source licensing lets some commercial competitors to gain use of Microsoft intellectual property, without offering compensation.
  • Open source licensing uncertainty exposes developers and business adopters, some of which are Microsoft partners and customers, to legal liability.

From Microsoft's perspective, it has tried to resolve these problems through its Share Source program, cross-patent licensing agreements and direct IP licensing engagement with commercial sellers of open source software—Novell being most notable.

In response to my questions about the patent infringement claims, Microsoft issued a statement that made clear the company's reasons for the timing:

"The latest draft of the GPLv3...attempts to tear down the bridge that we've built between proprietary and open source software. We're discussing the patent issue more directly now in an effort to call attention to the problem and emphasize the important need for the bridge in a world where many customers have mixed technology solutions."

It's no coincidence that Microsoft's chief lawyer has devoted so much time and effort to licensing issues. From where I'm looking, licensing and intellectual property issues dominate Smith's time, which makes sense for a company whose business is almost all about IP licensing.

Smith's role, Microsoft corporate culture, increasing Linux and Web application adoption and the impending GPLv3 are combined reasons for Smith to come out now and put the open source community of developers and adopters on notice. He has issued his version of the Gates open letter.

In the end, Microsoft is just seeking control and accountability, both of which it could comfortably gain through agreements like the one with Novell. The Novell deal strongly suggests that the days of denial are gone, that Microsoft recognizes Linux isn't going away. But Microsoft still needs to get its due, and it expects open source to respect Microsoft patents—not that the company has really identified any—and for customers to be properly licensed.

From the Microsoft statement: "Any customer that is concerned about Linux IP issues needs only to obtain their open source subscriptions from Novell."

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Comments (13)

See Level :

Google better watch out, they're probably not using much if any Microsoft software, and their server farms are probably mostly Linux. A move to Solaris would probably be smart for them about now.

chips b malroy :

Going say it again, MS is a convicted monopoly, and is being a bully using its monopoly powers in default of its agreement with the DoJ. Its time to really fine them, hand out some jail time for Bill and company, break up MS into little bitty pieces, and never allow the pieces to make or sell any part or whole of an OS again.

If the DoJ is too corrupt to do it, then please, EU do it now.

Red Hat, you might be the target, sue MS first.

Then again, it could be all about Microsoft Patent Claims Hint at Internal Issues;
http://www.pcworld.com/article/id,131806-c,companynews/article.html

PolarUpgrade :

There's a deeper import to MS's license-driven objection to Open Source.

One of the things about copyright licenses is that there are two ways they are defined: By explicit contractual (license) terms, and by the custom of the marketplace.

Here is an example. Historically, when a writer "sold" an article to a newspaper or magazine, unless he or she was an employee or it was defined as work for hire, or unless a contract handed over more, what was actually transacted was a COPYRIGHT LICENSE to do just ONE thing with the owrk. In the absence of written terms what was implicitly included was a LICENSE or "right" to print the article once, sometimes referred to as First North American Serial Rights. Afterward NOTHING else could be done with the article by the publisher unless the publisher pad for each later use.

That rule was defined over time by common practice in the marketplace, at least here in Canada.

Now, here is where we can begin to understand MS's patent/licenses offensive on Open Source.

Copyright licenses are by nature limited, subject to some circumstances where there are exceptions. This limiting nature of a license generally means that no other use other than that implied by a license of spelled out specifically by it is allowed, except that in the absence of a written license the courts may infer the license terms. And the courts may well in effect extend permissions over time.

The difficulty is that the inference is often a matter of looking at how the marketplace is actually using materials over time, so that if MS fails to define what is licensed and what is not, there is a risk that eventually a court might rule that much more is included in any one Open Source IP license situation than MS would prefer. The reason this is a big threat is precisely because the market as we all know tends to take a great liberty in presuming allowable uses absent being locked down.

So, it seems to me that MS is trying to head off a situation where the common practice of the marketplace essentially zeros out IP control with respect to Open Source software. This it seems to me is very similar to the reason a number of writer groups in Canada and in the U.S.A. launched lawsuits over digital reuse of articles online years ago (an example being Tasini versus the New York times et al). Part of the reasoning behind such cases is that they would at least lay claim to an IP right and not allow the common practice of the marketplace (unrestrained copying by publishers) to become that in which people simply repost articles online without paying for the right to do so.

In this context those companies that cave to MS's demands should understand that this is only the beginning. If the goal is to prevent any eventual court rulings that effectively negate MS's IP control in the Open Source area, than we can expect that in a few short years there will be no Open Source software. If developers must pay MS a tithe for creating what amounts to freeware, they in turn will be obliged to charge customers to recover that cost.

OpenOffice for $249 U.S. in 2012, anyone?

N Forester :

So who's copying who? Microsoft's success is routed in the deal they made with IBM many years ago - to provide a non-exclusive license for an operating system called PC-DOS (MS-DOS). PC-DOS 1.0 was developed from an OS called QDOS that they (Microsoft) purchased from Seattle Computer Products. QDOS was a direct clone of CP/M by a company called Digital Research. Digital Research considered an intellectual property dispute, but the law was not clear enough at the time to sue Microsoft/IBM (see QDOS in Wikipedia).

G. Steve Arnold :

...except that legally, a license *isn't* a contract!
This article explains the difference

(Skip the parts about the GPL and just pay attention to the legal definitions near the top.)


--

G. Steve Arnold :

Uuugh! Munged URL. Here's the link to the article.:

http://www.groklaw.net/article.php?story=20031214210634851

PolarUpgrade :

G. Steve Arnold noted that a license is not a contract, but his referenced article link notes nonetheless the common practice of 20th century licenses to roll in contractual obligations.

A license indeed is like a permission; sometimes a license is also characterized as being similar to a lease in that one gains use but not ownership. It is what the "licensee" may be compelled to agree in order to obtain the license that often rolls in contractual elements.

A copyright owner can set almost any terms desired in return for the license or permission, and these can be expressed as binding obligations.

G. Steve Arnold's post does go to the core of the Microsoft patent offensive, however, because MS's effort is clearly related to preserving what might be called "The End User License Agreement Barrier to Entry" as well as "The Patent Barrier to Entry"--that is, the common terms in MS EULA's that go so far beyond a mere permission, but which also are key to an exacting lockdown of the end user.

Presumably MS is boxed in now that Google and other Web 2 initiatives, not to mention Linux, seem to be finally in the process of doing an end-run around the previous MS Maginot Line--the good ole Applications Barrier to Entry that was the focus of the Netscape battle years ago.

In some sense Microsoft is attempting to preserve its heavily over-written licenses, which exploit the ability of a license to set almost any terms in return for the permission.

Perhaps another key here is that in the corporate documentation for Vista's baked-in DRM it is reportedly clear that Microsoft included that DRM in order to preserve Hollywood's business model, the flipside being that MS expects the rest of the computer industry to respect the Microsoft business model.

like Big Hollywood with its DVD-sniffing Labrador Retrievers (their latest weapon against movie piracy), Microsoft is desperate to preserve its model, lest the common practice of the marketplace evolve something different which is later affirmed as valid by the courts.

At bottom one suspects that neither Hollywood nor MS are really happy about beating up their customers, but they do it because they perceive it more important to stake a continuing claim for their business models, lest these models be sidelined by the marketplace.

Marco :

Understanding to MS
MS is now the “King of the mountain” and has no land to expand to except the sky (Internet), but there is Google and MS has no clue how they might compete with Google (MS's products which compete with Google are disdained for the costumers.)
On the earth (“mountain”) Apple is recovering (economic base ipod) and is attacking by the left, MS is trying to counteract (Zune), but this land is closed too (Apple users love Apple.) MS worries but not a lot because the elitist condition of Apple limits it (although Steve is trying to change it.)
Linux attacks by the right- and Linux really bothers MS because, same as Google, it is not possible fight them (with fairness ) because of its “free” condition,( ironically , Linux took strength thanks to the destructive attitude of MS- MS sowed the seed of its own destruction)
The matters here it's that all software arrives to a breaking point- and it is because the software up to this point makes all basic stuff right and, after this point, it will be or/and luxury, or/and complex, or/and specialized. At the moment Ms's reached a breaking point (read XP) and Linux is close to it (ubuntu) Ms knew this was going to happen, but hoped it would happen later than sooner- however, it also knows that every client lost to Linux is pretty much gone for good- so it would be a question of time until the empire falls apart. So they tried to diversify- their luck so far has only been with their games console (even so, it was with great loses at first.) Ms knows it its at its summer's end- but what it does not know is that it will die not by the hands of Apple, Linux or IBM, but by those of the consumer...but let's not forget there is a long autumn and an even longer winter ahead. Also, underground lives IBM and it is not precisely friendly.

Marco :

The Ms strategy against Linux
Ms' plan stage one:
Get a fool (Novell) to have legal basis
Stage two:
Get as many deals as possible (like Dell and Samsumg) using FUD (that's what it's doing now and will do again)
Stage three:
Try to develop Novell (chained to Ms' patents, of course) and, if possible, try to kill the other distros by starvation (no client=no money)

chips b malroy :

This Patent attack by M$ goes back to Nov 2004 when Steve Ballmer first started this type of FUD attack. So this one really has nothing new accept a few meaningless numbers to go with it.

Could this just be a clever way for M$ to hide the really bad news to their stockholders as to the "real story" that is going on?

http://linux.slashdot.org/linux/07/05/14/065239.shtml

Quote; "The central government of Japan says it plans to spend around $1.25 trillion yen, or $10.4 billion, on IT over the next year. The government has said explicitly it wants to decrease its reliance on Microsoft as a server operating system platform"

10.4 Billion dollars coming out of MS pocket this year. Think about it. 70 Billion expected revenue this year for MS, minus 10.4 billion they just lost on this deal.

If this is true, this has got to hurt M$ stock, one would think? That is a major hit.

The Dog :

Heh, M$ got to be a $42 billion company by the time they released ME. No activation, no paranoia. Simply put, they're ungrateful of their customers and don't know which side their bread is buttered on.

As far as the IP issue, I once employed a programmer who I thought worked a certain magic, like a Bill Gates. He always insisted on releasing to me only binary programs and never source, despite being paid to develop the app.

When I got into it I found out he was not that special AND he was padding his hours. I found that disrespectful of me and the clients I was delivering to, so how can guys like Bill Gates think I want to pay him too much for too little and no rights to use something I'm paying for as I please within the bounds of my office? (We're talking 3 CPU's and 2 users.)

Sorry, I can't get that worked up over IP. It's not the same type of art a nice novel or short story is. I can always find someone to do this kind of work, just like I can find an auto mechanic.

Paying for every little thing every single time just is not an option for me and my company. We are moving, without fear, to Linux servers hosting Software as a Service. We don't expect our software suites to be as special as the support and comfort we provide our customers, and that's what we'll collect dollars for. When was the last time you felt supported and comfortable with a Microsoft product?

I lost part of a job to a Great Plains integrator. Those guys look good in a suit, can't answer a damn question for $125 an hour. My customer is sorry now that we din't build their solution in open source as proposed. There ya go, most of M$ is lame and untalented, and like most big companies depends on an army of lawyers for survival and not anything groundbreaking or
helpful.

Hollywood? Yup, their in bed with those bastards too. I had a client that installed the Zune software, and suddenly had no i-Tunes library anymore and couldn't play his MP3's.

So just what do consumers and small businesses own? Isn't the hardware we purchase taken from resources we should all own?

Isn't it our right to appropriate and manage raw resources on our own, without the approval of the Fourth Reich M$ and the other plutocratic players?

They will take a slash and burn strategy across the IT spectrum before it's all over and to freedom-loving individuals this should all mean WAR. They want nothing going on except for all of us to be in one of their little cubicles eating their rat food. Open Source and Net Neutrality are pure threats to them.

If you don't believe any of this, just remember how much fun and how many fortunes were made in the early days of the Internet before "business method patents" and lawyers became the standard for an Internet business model. Pretty soon they'll be able to dispatch a "fireman" to your house and burn your PC for having a single independent thought on it, much less an unapproved piece of sofware or OS if we just lay down and take this.

Ed Lane :

Joe mentions 4 points in his article about how Microsoft views open source. Unfortunately, only one of them is true

Open source is based on the concept of community ownership and intellectual property free of any single company's control. True

The GPL creates opportunity for third parties to use, without offering fair compensation, intellectual property developed by commercial developers like Microsoft. Untrue. The GPL does not make it easy to use proprietary software. In fact the open nature of Open Source makes it harder to insert proprietary code, as the source is available for all to view

Open source licensing lets some commercial competitors to gain use of Microsoft intellectual property, without offering compensation. Untrue. Open Source does not allow anyone to steal from Microsoft
Open source licensing uncertainty exposes developers and business adopters, some of which are Microsoft partners and customers, to legal liability.Only true in Microsoft's distorted view of the world. Red Hat and other commercial distributors of Open Source have indemnity that is at least as good as that from Microsoft. If you choose to get your software at zero cost, then you shouldn't be surprised that there is no indemnity.

TyphoidHippo :

Ed Lane:

Your ideas are pretty much right, however, I think that Joe would agree with you.

When Joe makes those four points in the article he says

"Open source is messy business for Microsoft and about to get messier because of GPLv3. The problems,

****as I believe Microsoft sees them:****"

The part in ****s is, of course, the key language used to clarify that the four points are merely his educated guess at how Microsoft (in all of it's greedy evil blah blah corporate conquer the world mentality) views open-source as a problem.

I don't know why I felt it necessary to clarify this to you...probably just so you know that Joe (and Microsoft Watch.com in general) is on our, the FUD butter's (I should trademark that), side. ;)

Have a great day everybody!

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