The dramatic saga of Commerce One’s fundamental Web Services patents has apparently concluded with a happy-enough ending. Based on pioneering work by Robert Glushko and Marty Tenenbaum, among many others, this patent portfolio began with work spun out of CommerceNet (the nonprofit consortium) as Veo Systems, Inc.

Last year, there was a court-ordered auction of the bankrupt company’s patents to a then-unidentified high bidder who some feared would begin to use the patents to shake down the nascent Web Services industry. In time, it appeared that Novell acquired those rights, and this week, a new consortium “of five technology and consumer electronics companies – I.B.M., Novell, Philips, Red Hat and Sony – who share an interest in promoting the spread and adoption of the free Linux operating system” named Open Invention Network made them available under royalty-free licenses.

Company to Start Offering Free Use of Patents It Holds
November 10, 2005

A new patent-holding company, the Open Invention Network, is expected to begin operations today with the unusual business plan of buying certain patents and licensing them without charge.

The company has the financial backing of five technology and consumer electronics companies – I.B.M., Novell, Philips, Red Hat and Sony – who share an interest in promoting the spread and adoption of the free Linux operating system.

The chief executive of the Open Invention Network, Gerald Rosenthal, is a lawyer and a former director of I.B.M.’s intellectual property licensing program.

At I.B.M., Mr. Rosenthal led the lucrative technology-licensing program, which has routinely earned $1 billion or more in recent years. He will be pursuing a different strategy at the new company.

“By itself, this is not a money-making enterprise,” he said. “Our goal is to enable the Linux ecosystem to grow.”

As users or distributors of the free operating system, the five corporate supporters of the Open Invention Network all have a vested interest in fending off threats to Linux.

Legal challenges to Linux users have already surfaced, but none have slowed the adoption of Linux, which is used everywhere from corporate data centers to consumer devices like digital music players. Yet the legal risk, analysts say, is an uncertainty in the outlook for Linux.

In March 2003, I.B.M. was sued by the SCO Group, a Utah company, which said that I.B.M. had illegally contributed code to Linux from the Unix operating system. SCO had obtained the licensing rights to the Unix software and contends that Linux, a variant of Unix, violates its rights. SCO is seeking $1 billion in damages. I.B.M. denies the charges in the case, which is pending.

Another worry for Linux users is the rise of specialized intellectual property firms that acquire software patents, and then make money by licensing the patents as widely as possible.

That concern arose when the patents of a bankrupt dot-com company, Commerce One, were auctioned in December for $15.6 million.

Computing specialists worried that the patents dealt with technology that was broadly used in Internet commerce, and, if aggressively enforced, could result in many companies having to pay license fees. The winning bidder, however, was later identified as a lawyer representing JGR, a subsidiary of Novell.

Novell, a Linux distributor, is placing those patents in the new portfolio of the Open Invention Network, based in Pound Ridge, N.Y.

Patents owned by the Open Invention Network will be available free to any company, organization or individual that agrees not to assert its patents against others who have signed a license with the new patent-holding company. The Open Invention Network will continue to identify and acquire patents related to Linux.

Mr. Rosenthal sees the new company as a guardian of innovation in an environment for technology development.

“If you look at the Internet and Linux,” he said, “a lot of it has been the result of collaborative work without anyone really owning the intellectual property.”