Late last month, Microsoft CEO Steve Ballmer told Wall Street analysts that the commercial software industry faces a risk: Open-source software could threaten the sector's profits in the next decade. At the same daylong meeting, chairman Bill Gates asserted the need for "increased, intense focus" on protecting intellectual property in the software business and predicted a dramatic rise in the number of patents that Microsoft files. A week later in San Francisco, a different sentiment was in evidence at the LinuxWorld trade show. IBM, perhaps the most influential patent holder in the tech industry, said it wouldn't use its hefty patent portfolio against Linux, as it released into the public domain the software code for its Java-based Cloudscape database. "No single vendor, no matter how large, can claim a monopoly on innovation," said senior VP Nick Donofrio. And Matthew Szulik, CEO of Linux distributor Red Hat Inc., denounced patent holders' "veiled threat of legal intimidation" against users of open-source software during his speech.

Open source will help establish a shared worldwide computing environment, Red Hat CEO Szulik says. Photo by Bob Rives

Meanwhile, in Las Vegas, Darl McBride, SCO Group Inc. CEO and Linux public enemy No. 1, largely sat on the sidelines, defending the market for commercial Unix. There was little new information about the company's $5 billion intellectual-property infringement lawsuit against IBM and suits against some large Linux users, but, McBride told InformationWeek, "if we lose in court, then Linux is at that point a runaway train, and we never will chase it down."

Linux and other open-source software customers might fear a train wreck, given that the intellectual-property agendas of some of the largest IT companies appear to be on a collision course. The fast-growing popularity of Linux and other open-source products has garnered the attention of commercial vendors, who see opportunities for building open-source communities that ultimately contribute to the bottom lines of their for-profit software. For instance, IBM hopes to encourage developers to write applications in Java, greasing the wheels for sales of its pricey WebSphere middleware and other commercial products. But the potential to run afoul of intellectual-property claims, combined with the sheer proliferation of open-source projects, means customers need to make open-source choices carefully.

Concerns about what patents the city of Munich, Germany, might violate in moving 14,000 PCs from Windows to Linux caused city officials last week to delay those plans. Patent issues could be a "catastrophe" for the city's Linux effort, an official says. Stateside, Open Source Risk Management Inc., a startup that offers insurance against patent and copyright violations, last week released a study that cites 283 possible patent claims that might be applied against Linux. A third of the patents are owned by Linux backers, including Hewlett-Packard, IBM, Novell, and Oracle, which are unlikely to assert claims. "IBM has no intention of ever asserting its patent portfolio against the Linux kernel unless forced to," Donofrio said.

However, Microsoft owns 27 of the patents and is getting more aggressive on intellectual property. The company plans to accelerate its patent filings from a little more than 2,000 in fiscal 2004 to more than 3,000 in fiscal 2005. Protecting its intellectual property could become more important to Microsoft in a world in which the software business doesn't guarantee a lock on profits. "Will software be a business that generates a lot of profit in the future, or will it not?" Ballmer asked. "That really is the big question people ask us when they talk about open source."

What's more, the number of open-source software projects is multiplying quickly, raising the question of whether there's a development community to support them. Computer Associates last week offered a prize of up to $1 million to entice developers to program for its newly open sourced Ingres database. SourceForge.net, a Web site run by Open Source Technology Group Inc. that hosts open-source projects, now counts 80,000 of them--most obscure. And HP's top Linux executive, Martin Fink, last week said that the large number of open-source licenses is causing confusion.

Amid the open-source rush, some customers are cautious. "You can make any code you want open source," says Michael Reeves, a manager of mainframe operations for Fidelity Investments. "That doesn't mean a company is going to download it and run it in production systems."