OSI asks German Federal Cartel Office and US Department of Justice to investigate CPTN transaction (update 2)

PDF icon CPTN-Position-Final.pdf183.85 KB

January 19, 2011 (update 2) - The Antitrust Division of the US Department of Justice has acknowledged receipt of the following correspondence (with attachment):

I am writing to you this morning in my capacity as President of the Open Source Initiative, a US 501(c)3 non-profit organization. Last month the OSI filed a statement with the German Federal Cartel Office (FCO) outlining our deep concerns about a proposed transaction whereby four companies, Microsoft, Oracle, Apple, and EMC, would create a new non-practicing entity (NPE) to acquire and hold Novell's entire portfolio of 882 patents. Since making that filing, we have been joined by the Free Software Foundation (FSF) and have updated that statement to represent that both our communities--the open source community and the free software community--are concerned that CPTN represents a potential broadside not against any particular product in the market today, but against one of the only viable sources of competition for these companies in software today: the free, libre, and open source software (FLOSS) communities.

Attached is our joint statement that reflects both our consensus thinking on the subject and our joint appeal that DOJ investigate the true purpose of CPTN.

If there is any other information you require from myself, any OSI board member, or the OSI as a whole, please do not hesitate to let us know. Thank you very much for your consideration.

Michael Tiemann
President, Open Source Initiative

January 2011 (update) - This article has been updated with a new statement that is being filed with the German Federal Cartel Office (FCO) and the US Department of Justice Antitrust Division. The update is that it is now a joint statement of both the OSI and the Free Software Foundation (FSF). Please see the attached pdf document for more information.

December 2010 - Seven years ago, Novell acquired the German Linux distributor SuSE in a transaction valued at $210M, giving Novell a position in the fast-growing market of commercial open source software. Last month Novell announced that it would be acquired by Attachmate in a transaction valued at $2.2B, causing many to wonder what will become of Novell's open source assets and also Novell's sizeable patent portfolio, which has never been used to attack open source and has in some cases caused patent aggressors to step down their rhetoric and their actions against open source software.

Earlier this month it was revealed that a consortium of companies led by Microsoft have offered over $400M to strip out all of Novell's patent assets from the Attachmate transaction and place them into a new entity called CPTN. The principals of CPTN were secret from the open source community until Dec 16th, when they were discovered and published.

The fact that Microsoft was leading the takeover of Novell’s patents was itself alarming to the open source community, but when it was revealed that Microsoft had recruited Oracle, Apple, and EMC to be co-owners of the patents, the OSI Board felt compelled to request that competition authorities take a closer look at the proposed transaction. We found that the German Federal Cartel Office was open to receive comments from the public about this transaction during the month of December, and so we drafted and sent a letter (see attached), outlining our concerns and requesting that they investigate this transaction thoroughly. We have received an acknowledgement of receipt by the department in charge, and we stand ready to offer any additional assistance that may be required by investigators should they ask for such help.


As I read the letter you wrote to the German Federal Cartel Office, I was particularly taken with Appendix paragraph B:

"Open source software is not "non-commercial" - rather, it is software where revenues are generated from the delivery of value around the software rather than by controlling access to the software. This switch away from artificial scarcity as the only means for monetization liberates developers from many places to synchronise overlapping interests and collaborate around a open source code "commons" to sustain the wealth-creating vehicle they jointly enjoy."

In my role as the Global Lead for HP's Open Source and Linux Profession, a trade-guild-like community of like-minded professionals across all of HP, I still, unfortunately, find it occasionally challenging to describe the value proposition of this most fundamental and compelling of development models; this definition is elegant and succinct, and will help me to clarify our own position going forward.

As for the underlying issue that prompted the letter in the first place, I will say also - and speaking solely as an interested individual, and not as a representative of Hewlett-Packard Company - that I'm happy to see HP absent from the membership of CPTN Holdings, LLC, and I look forward to a reasoned and rational response from the German Federal Cartel Office in response to the concerns raised in your letter.

The notification/application to the Federal Cartel Office has been withdrawn as of 30.12.2010 (http://www.bundeskartellamt.de/wDeutsch/zusammenschluesse/zusammenschluesse.php) It might be not unlikely that the EU-Commission is now the competent body for reviewing competition issues on that. See Council Regulation (EC) No 139/2004, Art. 1 (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2004:024:0001:0022:EN:PDF)

I believe that the German FCO notofocation will be refiled in the future, pending the revisions necessary to gain approval from the US DoJ.