Microsoft has distributed nearly all of the US$240 million worth of SUSE Linux Enterprise Server subscription certificates that it purchased from Novell as part of a 2006 patent indemnification pact, the companies said.

Under that agreement, Novell received an upfront payment of $348 million from Microsoft. Microsoft agreed to pay Novell $240 million of that investment to purchase the subscription certificates to resell or distribute to its customers as a way to incentivize the use of SUSE Linux over a five-year period. A total of 475 customers have used an unspecified number of coupons, according to Microsoft. Customers redeem the coupons for a single- or multi-year subscription for upgrades, updates and technical support from Novell.

Part of the $348 million also went toward setting up the companies’ joint technology facility in Cambridge, Mass., which has focused its work on document interoperability, identity federation and virtualization techniques.

Microsoft allocated $60 million of its investment for marketing Linux and Windows virtualization solutions, and agreed to spend $34 million on marketing to promote combined Microsoft/Novell offerings.

There are now 20 to 30 full-time Microsoft and Novell employees working on the business end of the partnership, in addition to a team of full-time engineers, according to Josh Dorfman, director of global partner marketing at Novell.

Microsoft also launched an interoperability commitment to finance a support program, which began in August 2008. It’s committed to spending an additional $25 million, and up to $100 million, to purchase more Novell certificates to migrate customers that use other Linux distributions onto Novell’s SUSE Linux.

Those customers will receive three years of support from Novell. The company is currently “working through” that investment, and current sales figures will appear in Novell’s upcoming quarterly earnings this month, Dorfman said.

Once the support program is funded, promotion will end, according to Novell’s director of worldwide public relations, Ian Bruce. “We have no definite plans at this time, but we’re always looking at ways the two companies can work together going forward. There’s clearly strong customer demand.”

The pact has been very profitable for both companies, said ITIC principal analyst Laura DiDio. “It gives [Microsoft] a presence in the open-source world, however unwelcome it is to some folks.”

SUSE Linux has led to a resurgence for Novell, and the operating system ranks second only to IBM’s AIX version of Unix for having the least unplanned downtime in ITIC’s reliability studies, DiDio added. “It’s not like Microsoft is wed to an albatross.”

Controversy surrounding the indemnification agreement inspired a provision in the GNU General Public License v3 that bars similar patent agreements going forward.

“Generally speaking, most software companies have attacked each other with patents; software patents are quite a drain on productivity of the software industry in this regard,” said Bradley Kuhn, a policy analyst and tech director at the Software Freedom Law Center, which provides legal services to Linux companies.

“But I am not readily aware of anything specific between Novell and Microsoft before their deal. If it was a large enough dispute that it made it to court, the court records would presumably show if there was.”

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