Talking Linux IP with Bill Gates

If you could ask Bill Gates one question, what would you ask? I spent an hour today with Microsoft co-founder Bill Gates on the company’s Redmond campus. I chose to ask Bill about Microsoft’s intellectual property stance against Linux and its open source developers, from the SCO Group’s litigation against IBM to Steve Ballmer’s recent claim Linux infringes on Microsoft patents after signing a patent indemnity with Novell.

Bill Gates claimed he had never heard of BayStar Capital, an investor in SCO Group and their litigation against large corporate supporters of Linux. According to recent court documents BayStar founder and managing member Larry Goldfarb claims Microsoft wished to promote SCO Group through independent investors such as Baystar, backing a $50 million investment with supposed guarantees from Microsoft.

Last month Microsoft CEO claimed Linux uses Microsoft “patented intellectual property” and Microsoft shareholders deserve an “appropriate economic return for our patented innovation.” The statement seemed like an attempt to create fear and uncertainty in the Linux market, so I asked Gates about the new interest in patent swaps with open source operating systems. Gates claimed patent cross-licensing is common practice in the software industry, protecting companies who indemnify their users from software risks.

While I didn’t get a rundown of each piece of the Linux kernal Microsoft finds infringing, it does seem like Microsoft is just getting started with its intellectual property swaps and settlements with Linux corporations. Richard Stallman recently commented section 7 of GPL v2 does not come into play deals such as Microsoft-Novell. I think there is still a degree of IP uncertainty continually created around Linux and distributions with shareholders may seek partnerships.

Disclosure: I met with Gates as part of a small Microsoft event targeting 14 “web influentials” hosted in Redmond. Microsoft paid for my flight from San Francisco, two nights at a local hotel, and my meals for today.

Below is the full transcript of my brief conversation with Bill Gates. Microsoft asked me not to post the audio of the talk.

Transcript

Niall:

In the last month it’s been interesting to see the deal with Novell, and I know that was a big deal for Novell and Microsoft to come together. At the same time Steve [Ballmer] has been making patent assertions saying there are over 200 patent violations in the Linux kernel…

Bill:

Actually that’s not a number that comes from Microsoft..

Niall:

Right, that’s an OSRM number from two years ago.

Bill:

[Richard] Stallman gave a speech recently that used that number. I don’t know if he was quoting from the OSRM thing or what. Just judge for yourself. [Gates laughs briefly]

Niall:

OK. Two questions.

  1. Was Microsoft ever directly involved with the SCO Group in their lawsuit against IBM, either through BayStar Capital or others?
  2. Why is Microsoft recently choosing to go after supposed patent violations with various operating system companies?
Bill:

I don’t know BayStar.

Niall:

It’s an investment company. One of their executives testified Microsoft invested $50 million to offset SCO’s costs in the lawsuit.

Bill:

When?

Niall:

About a year ago. [Correction: Legal papers filed September 13, 2006]

Bill:

I don’t know anything about it. Is SCO still around? Are they still viable?

Niall:

The lawsuit didn’t go anywhere.

Bill:

What’s the latest? Is SCO still around?

Niall:

I think so.

Bill:

OK. I should look that up. Once upon a time SCO was a vibrant company and I certainly remember Larry Michels and all the guys who worked there. It’s not a name I’ve thought of for many many years.

Niall:

They are in Utah now I think.

Bill:

Wow, that’s a different place.

Niall:

So why the new interest in patent agreements with the different OS vendors? What’s going on?

Bill:

We’ve been doing patent cross-licenses for a long-time. It was a tradition in the computer industry and so we had to go out to all of those companies and give them value, so if they had some intellectual property we could get a license from them.

Digital Equipment, SGI, Hewlett-Packard, NCR, we had to do about 50 different agreements. IBM is the mother of them all, to get the cross-patent agreement with them.

I think because we had a flurry of those, about 10 years to get those basic cross-patent deals in place. I’m not sure if we’re at our peak on that or not. I know we did a ton because we indemnify our users. When you buy Microsoft software we say “hey, if there’s any patent problems, we indemnify you for that.” So we have to both protect enough of our own stuff and have enough licenses in that we can feel comfortable providing that for people.

We got some IP rights from Novell. Novell’s customers got some IP rights from us. It’s pretty normal stuff. The only thing that’s abnormal is open source companies hadn’t been involved in IP licensing and indemnification before. In terms of the commercial industry it’s business as usual.

18 comments

Commentary on "Talking Linux IP with Bill Gates":

  1. nbjayme on wrote:

    talking about abnormal….

    The world existed without patents and the Open Source Software innovates by leap and bounds without the need of Software Patents.

    Software patents were created by abnormal individuals who want to have monopoly.

    So, better be in touch with reality. Software Patents are a restrictions humans made up with.

    :D

  2. Aladdin Sane on wrote:

    Niall,

    Thank you for posting this. I found it informative and relevant.

    Posting the audio would be more relevant, because we’re looking both at what is said, and how it is said.

    Also, the transcript doesn’t seem to cover an hour’s time. Short hour?

    • Niall Kennedy on wrote:

      I asked permission to post the audio about 5 times and was denied at least 5 times. A few of us captured full audio.

      I was one of 14 attendees and we each had the chance to ask one question. Other people asked what music Bill Gates listens to, what he wants for Christmas, and better ways to provide quality education and healthcare.

  3. Robert Chambers on wrote:

    OK, the CEO of one of the most powerful software companies does not know who else it is playing with “SCO” I find that very hard to believe, or he is a complete idiot.

  4. oh10101 on wrote:

    Niall,

    Bill said; “We’ve been doing patent cross-licenses for a long-time. It was a tradition in the computer industry and so we had to go out to all of those companies and give them value, so if they had some intellectual property we could get a license from them.”

    Which means they are out to destroy and pillage the FSF, GPL, Linux, Ubuntu, all the US/EU/Public community property, and all OSS competition, these are more monopolistic attacks on a Global Open Competitive Economy.

    This is further destruction of capitalism, democracy, and meritocracy. Now we are devolving into a perverted nation and new-world-order of corporatism, plutocracy, and nepotism [AKA: The New Age of Corporatist Aristocracy].

    If enough companies and sovereign nations fold to this and other corporatist tyranny, and the legislatures and courts, continue as in the past to protect monopolies and corporate welfare, then we as in US, EU, and them are screwed as a culture and species.

  5. Leo on wrote:

    Did you just ask him questions? Was it full of security there? Did he have body guards? Were you within reach of accidentally pouring your hot coffee all over his shirt?
    Ahh… Thanks for your post, man. It actually was interesting to read it.
    Maybe that audio will somehow mysterioulsy leak out into the internet. You mentioned there *were* other people there, right?

  6. Jon on wrote:

    Were you within reach of accidentally pouring your hot coffee all over his shirt?

    How about a pie in the face?

    In all seriousness, I don’t support Micro$oft one bit with their IP plot. All they have given are incomplete answers that run Linux users off the wall. But of course, that is exactly what they want. They want one of two things: Companies to switch their backbones to Windows, or to Novell, because either way, Microsoft directly benefits from it. Microsoft also indirectly benefits from it because of the amount of funding it is giving Novell. They now have a lot of control over where the distro is going. Linux is their number 1 server competitor. And yes, it’s free (mostly). Why not scare companies into switching to Novell to avoid potential lawsuits and then sweep Novell out of the game later down the road? Then what’s next? Red Hat? By taking Novell out, Microsoft is one step closer to regaining control of the server market. Could you imagine how much damage Microsoft could do if they acquired a Linux distro? Just think about it for a second: Microsoft SuSE. They will have successfully gained a strong foothold in another very large facet of the server market. But of course, with the deals made between M$ and Novell, they are already on their way because of their monetary influence.

  7. Robert Gerace on wrote:

    Niall,

    I think Microsoft is running scared. Remember the saying, “DOS isn’t done unless Lotus won’t run?”

    Microsoft has been on a great ride since the early 1980’s because up until now it mattered which OS you were running; but it is very quickly starting to NOT matter. Web 2.0 is changing that. Also, people like me (who have paid dearly to have ‘supported’ products) have begun putting things like Linux and PostgreSQL into production systems.

    My initial tests have been very successful — to the point where I recently made a decision to install it over what would have been a Microsoft SQL Server purchase.

    I suspect I’m not alone.

  8. JSki on wrote:

    1. Was Microsoft ever directly involved with the SCO Group in their lawsuit against IBM, either through BayStar Capital or others?

    not answered. gates went off on baystar tangent and you let him go. too bad you didn’t zero in and hold him accountable to answer the question.

    2. Why is Microsoft recently choosing to go after supposed patent violations with various operating system companies?

    This is a softball question and i guess he answered it.

    bill’s evasion isn’t an accident. there is a reason he didn’t want to answer that question. he’s the ring leader of FUD and will keep it going as long as he can. delivering FUD and kickbacks is easier than delivering quality software.

  9. Pat Augustine on wrote:

    Bill Gates referenced the original SCO, The Santa Cruz Operation, which was actually heavily supported by Microsoft back in the late 1980s. Larry Michels worked there. They have nothing to do with the current SCO (The SCO Group) which is Darl McBride and used to be Caldera (they bought SCO’s Unix, and SCO became Tarantella).

    So mentioning SCO and Larry Michels and not having thought of them in a long time, it’s clear he’s thinking of the old SCO, with whom Microsoft had a definite relationship (Microsoft shipped Xenix, for instance, and SCO Xenix had Microsoft Copyrights all through it).

  10. Jeremy Pepper on wrote:

    Geez, no one ever asks the boxers vs briefs vs commando question, huh?

  11. Rick Montgomery on wrote:

    As a long time SuSe user and currently in process of replacing MS with SLES and SLED I am somewhat queasy on the deal with MS…
    so I have slowed the roll out… On another note we did test Xandros Server with Scalix and their new Business 4 and it is rather impressive, I was delightfuly surprised as were windows users I have talked with that tested it ….
    That aside I will keep a wary eye on the SuSe/MS deal… the days of OS/2 come to mind for some reason… just a nagging feeling of foreboding for linux

    • Matthew on wrote:

      I think your greater concern should be getting things up and running rather than the hype from those in the cheap seats.

      Like BG said, this is nothing more than a generic IP licensing; at the end of the day, Microsoft is a business; whether they make money off products, IP or a combination of both, their primary concern at the end of the day is making money.

      Microsoft’s eventual wet dream is to be in IBM’s position of having a large portfolio of technologies which they can license out and cream in high margin revenue; does it affect end users like me? nope, as long as the Linux vendors pay up the cash, its all good as far as I’m concerned.

  12. sachindaluja on wrote:

    Why are we, the self-proclaimed saviors of open source software, always looking at Gates as the wicked owner of the biggest software company. Can’t we, for once, look at him as the pioneer of friendly desktop computing? Or are we too envious of the great work he has done?
    We have become narrow-sighted. We should look at him as the force behind a big software company, still innovating and trying to bring the best technologies to our desktops. And companies don’t always end up doing the best. We must think of innovation first, and companies and individuals later. We must stop thinking in the terms “Us or Them”. The patent system may go down someday, but why accuse individuals or even companies of the problems it brought.
    Competition is always good for companies. Both Windows and GNU/Linux are excellent software. Only the ones that are inferior need fear.
    And comments like “or he is a complete idiot” certainly don’t do any good.

  13. Yusuf Smith on wrote:

    Anyone notice how remote Gates is in this interview? Given that his company is implicated in financing SCO’s lawsuits and that SCO has instigated one of the most talked-about (if mostly derided) lawsuits in recent IT industry history, you’d have thought he’d have more to say about them than “it’s not a name I’ve thought of for many many years”. What’s he up to? Has he just been sitting back the last few years and letting others do the work while he rakes in the money?

  14. BoloMKXXVIII on wrote:

    BG mentioned Digital Equipment, SGI, Hewlett-Packard, NCR as companies they had agreements with. Lets see…DEC is gone, SGI was dead and is basically a new company, NCR is gone. Only HP survived. Great odds Novel.

  15. Bjerrk on wrote:

    oh10101 wrote:

    Which means they are out to destroy and pillage the FSF, GPL, Linux, Ubuntu, all the US/EU/Public community property, and all OSS competition

    How exactly are they going to destroy (and i quote) “EU community property”, when we don’t have software patents here in the EU?

    Kind regards Bjerrk

  16. Mark in Frankfurt on wrote:

    What’s he up to? Has he just been sitting back the last few years and letting others do the work while he rakes in the money?

    Not exactly, but he stepped back from day-to-day business management several years ago and left that all to the CEO, Steve Ballmer. Bill is much more interested in new technology, so SCO would probably not be big on his personal radar.