Novell Comes Out

Secretive Buyer of Some E-Commerce Patents Turns Out to Be Novell

Many executives in the computer industry and at Internet software and services firms had expressed concern that the patents could be used to extract payments from their companies.

The portfolio consists of three fundamental patents covering the basic technology of business-to-business electronic commerce as well as several other patents and a range of patent applications, said Robert Glushko, one of the inventors.

Bruce Lowry, a spokesman for Novell, said the company had acquired the patents for defensive reasons and did not plan to seek licensing revenue from them. He said the company had chosen the secretive approach at the auction “for competitive reasons.”

The patent issue is a contentious one in the computer industry because companies increasingly use intellectual property – patents and copyrights – both to protect markets and to attack competitors. Moreover, a secondary market is emerging for intellectual property acquired by individuals and corporations not involved in the original inventions.

[…] Novell is clearly trying to avoid finding itself entangled in a case like the one brought against I.B.M. by the SCO Group, a Utah company, in March 2003, asserting that I.B.M. illegally contributed code to Linux from the Unix operating system. SCO had obtained the licensing rights to the Unix operating system and contends that Linux, a variant of Unix, violates its rights. It sought $1 billion in damages in the case, which is pending.

Related: A Payday for Patents ‘R’ Us

But others find the growth of patent holding companies troublesome rather than heartwarming. Critics of the patent system maintain that these companies – called “patent trolls” by their detractors – rely on excessively broad patents, particularly for software, that should never have been granted in the first place.

And the costs of litigation and licensing fees to settle patent disputes have become facts of life for technology companies.

Also see Pressure mounts for reform of patent system [pdf]