Microsoft Bails out Corel... A Securities and Exchange Commission (SEC) filing reveals some details about Microsoft's bailout of Corel, details that were conspicuously missing when the companies announced a $135 million deal last week. In addition to specifying the resolved legal problems between the two companies, which involves Microsoft's patented IntelliSense technology, the SEC filing explains how the two companies will bring .NET to the Linux platform. And interestingly, this revelation ties in nicely with Microsoft's apparently aborted attempt to port its own Office suite to Linux. With that strategy's failure, Microsoft has done the next best thing--ensure that Corel's Office suite, which is compatible with Microsoft's version, continues its Linux-based existence until the Linux .NET components are in place. Linux proponents are divided about the disclosure: It is seemingly good news for the OS's continued existence but bad news because the Linux community doesn't like to see Microsoft inching into its territory. In the 97-page SEC filing, Microsoft agrees not to sue Corel for violating several of its Office-related technology patents. The patentsinclude "Method and system for selecting and executing arithmetic functions and the like," dating back to 1994; "Method and system for customizing a UI in a computer system," also from 1994; and "Text checking application programming interface," a 1995 patent that covers Microsoft's IntelliSense technology, which connects applications to a backend spelling checker and "text checking engine." In other words, Microsoft patented the way its spelling and grammar checkers work in Office applications, where squiggly red and green lines appear under words and sentences that might need to be changed. Corel WordPerfect, like many modern Office applications, copied this feature from Microsoft Office. Microsoft hasn't issued Corel a license to use these technologies; instead, Microsoft supplied a legal covenant under which Corel can continue to do so. The distinction between the two is a bit unclear, but Corel apparently can continue to use these features while its multiyear agreement with Microsoft is in effect. The legal issues were, of course, an interesting unstated fact during the announcement, but more people speculated about the possibility that Corel, which has its own Linux distribution, would somehow work with Microsoft to port .NET to the Linux platform. The SEC filing makes this possibility very real. The two companies have entered into a 3-year agreement under which Microsoft can at any time require Corel to port some or all of the .NET technologies to Linux. If Microsoft decides that it wants Corel to port the .NET technology to Linux, Microsoft will provide Corel with full access to the .NET source code, and Corel will assign at least 20 full-time programmers and 10 testers to the effort, which will be completed within 1 year. The agreement contains numerous statements about the quality of the people who will be involved and the work that will be completed. In essence, Microsoft won't have to pay for the porting effort but will receive full ownership of the completed product. For a company like Corel, which was nearing bankruptcy, this deal is essentially a deal with the devil, one in which the company clearly wasn't bargaining from a position of leverage. Corel's agreement to port .NET to Linux is even described as a "work-made-for-hire" agreement, which means that the $135 million bailout is all the money the company will ever see for this effort; Corel won't receive royalties or future rights for its .NET efforts. Corel also has agreed to continue its license for Microsoft's Visual Basic for Applications (VBA), which Corel incorporated into WordPerfect Office last year. And Corel will prominently support Microsoft's Windows Media Technologies in all of its relevant Windows-based products. Additionally, all Corel Windows-based products released on or after January 1 will qualify for the Windows Logo, which will ensure that those applications meet certain Microsoft-ordained standards. As for Corel's WordPerfect Office suite, the company has agreed that the next major upgrade, due next year, will incorporate support for .NET software services. Corel has also agreed to support any future .NET technologies in its Office products no later than 6 months after Microsoft publicly releases them. Additionally, Corel has agreed to make its Office product services "consumable" as .NET services, using Microsoft standards. And Corel will bundle into its products support for any applicable .NET Building Block Services, which Microsoft will supply. The agreement reveals an interesting product--Microsoft can decide to release a new developer product called "Visual Studio for Applications (VSA) . . . which is intended to provide the ability to customize and extend middle-tier components of distributed applications based upon the .NET Frameworks," the agreement states. Corel will support this product if it is released. In the one bone thrown to Corel, the company can still release versions of its products that don't incorporate .NET; however, Corel must put as much effort into its .NET versions as it does into its non-.NET versions. Overall, the agreement is a stunning declaration of what $135 million can buy. The SEC filing confirms fears that Corel will become Microsoft's lapdog; the agreement is decidedly one-sided in Microsoft's favor. And comparisons to Microsoft's bailouts of Apple and Borland, while appropriate, suddenly seem fairer to those two companies. Of course, from Corel's standpoint, just being in business is far more desirable than bankruptcy. But Corel clearly paid a heavy price for its continued existence. Source: Copyright 2000, Windows 2000 Magazine
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