Litigoperation: Litigating While Still Cooperating (was “NetApp Sues Sun”)

Since NetApp sued Sun, our employees have been curious how this lawsuit will affect the way they do their jobs. Here is my message to them:

If your job is to cooperate with people from Sun, then keep on cooperating with them! Be nice to them. Aside from the small team whose job is to work on this lawsuit, I hope that employees can mostly ignore it.

People have asked how I can take this attitude. A lawsuit does mean that we have an important disagreement, but it does not mean we must be “at war”. Even though we disagree, Sun and NetApp can keep working together as major IT vendors to effectively support our shared customers.

Ray Noorda, once the CEO of Novell, coined the term coopetition to describe the relationship between companies that compete, but also cooperate. A great example is NetApp’s relationship with EMC. We compete with their storage products, but we partner very effectively with VMware, which EMC owns. (Diane Greene, the CEO of VMware, even recorded a video for our annual sales conference earlier this year.) We do compete with Sun, but many, many Sun servers use NetApp storage, and we have cooperated in areas like fixing customer problems and improving NFS. I remember the early days of NFS when Sun sponsored the Connectathon conference. Engineers from all the competing computer companies would come together to test their implementations of NFS. (I always thought that management would go crazy if they saw how closely the engineers were working together to find each other’s problems and help fix each other’s bugs.)

In this same spirit, companies that are litigating can still cooperate. (Litigoperation. You heard it here first.)

Part of Jonathan’s response to our lawsuit stunned me. He simply denied our account: “First, Sun did not approach NetApps about licensing any of Sun's patents and never filed complaints against NetApps or demanded anything.” Our name is really NetApp, without the ‘s’, but I didn’t want to edit the quote.

Here is an e-mail from Sun’s lawyers that refers to “claim charts mapping StorageTek/Sun patent claims onto NetApp products.” It says they had originally sent these to us “over a year and a half ago.” Do the math, and you can see that this started in the StorageTek days, but Sun continued it after the acquisition. Their proposed settlement was “a disk storage cross license in exchange for payment from NetApp to Sun of $36.548M.” At other times, Sun said it was entitled to hundreds of millions of dollars, so we are talking about very large sums of money.

On the other hand, it was no surprise for Jonathan to focus on open source, but I just don’t get it. For me, one of the most important rules of open source is that you must only give away things that belong to you. This is a lawsuit about defending our intellectual property against Sun, and against what Sun is paying their own engineers to do. It does complicate things that Sun has open sourced ZFS, but this is not a lawsuit about open source.

Comments

[Bill Bradford]

Too bad you can't just meet Jonathan (with a couple of lawyers present) and hash this out over dinner instead of sniping at each other via your blogs.

[Ken Hitz]

http://fakeschwartz.blogspot.com/2007/09/bring-it-cowboy.html

Wow. Look at all the things I just learned about my brother.

Ken

[Mark Hinkle]

So ZFS is out in the wild, and if Sun did infringe on your patents, what's the remedy? Since there really are no takebacks, I suspect that would be some type of compensation? Wouldn't that put you in the same position that you accused Sun of being in yesterday?

"Like many large technology companies, Sun has been using its patent portfolio as a profit center. About 18 months ago, Sun’s lawyers contacted NetApp with a list of patents they say we infringe, and requested that we pay them lots of money."

Just looking for clarification. Thanks.

[Thirumale Niranjan]

> (Litigoperation. You heard it here first.)

Too many syllables. "Sue-perate", with or without the hyphen, sounds better.

On another front, I wonder if Jonathan used the term "Netapps" deliberately. A cheap way to annoy one's opponent is to repeatedly mispronounce/misspell their name.

[anon]

This smells of SCO...

[JohnQ]

Dave-

Maybe I'm just stupid, but how does the alleged "smoking gun" of Sun's Dec 14, 2006 email prove your point? By your own admission the original letter you received 18 months prior to the Dec 2006 email came from "the StorageTek days" (i.e. prior to June 2005, _before_ the acquisition by Sun)

So, what was the purpose of StorageTek's June 2005 letter mapping (with claim charts) STK patents onto NetApp products? Was it perhaps part of NetApp's failed attempt to buy (via third party proxy, according to Jonathan Schwartz) said patents from StorageTek before Sun acquired them?

Taking a single email from Sun completely out of context and waving it around as "proof" that Sun tried to strong-arm you with their patent portfolio is, to say the least, disingenuous.

As for the Dec 14th letter itself, it mentions a cross-licensing agreement, not a threat of litigation for patent infringement (that's apparently NetApp's strategy)

Nothing in this email contradicts what Jonathan stated in his blog.

Jonathan stated that Sun did not initially approach NetApp with claims of patent infringment, but that Sun were willing to license, for a fee, the technology that NetApp had attempted to purchase from StorageTek before the Sun merger.

Jonathan also stated that in response to Sun's cross-licensing offer NetApp turned around and claimed that Sun was infringing on NetApp patents.

Again, nothing in the email you provided contradicts Sun's version of events.

And finally, I note the irony of your statement in yesterday's blog that:

"We filed suit against Sun because after we pointed out the WAFL patents, their lawyers stopped getting back to us."

And yet here you've provided an email from Sun's lawyers that clearly contradicts that statement. The Dec 14 2006 email cites your Oct 2006 letter pointing out the WAFL patents and goes on to request additional information from you in the form of a claim chart, as well as a meeting to further discuss your claims.

How can you possibly try to spin that as Sun not getting back to you after you pointed out the [alledged] WAFL infringements??

Sorry Dave, but all of this looks like a hell of a lot of creative spin, revisionist history, and hand-waving to me. Coupled with your VERY suspect decision to file these claims in East Texas troll country, all I'm smelling here is SCO-style desperation. Please try to compete with Sun/ZFS on technical merit instead of trying to get over on a patent impaired East Texas court.

-- JohnQ

--------------------------------------------------------------
Jonathan stated that Sun never "demanded anything". In this e-mail, Sun's lawyers claimed that we violated their patents (that's what "mapping its patent claims onto NetApp products" means, and demanded $36.548M as a result (that's what "cross license in exchange for payment from NetApp to Sun" means).

-- Dave Hitz

[Mike]

Without Sun's NFS NetApp would never-ever be where it is now.

Even if ZFS infringes some patents (which I honestly doubt), you should let them use these for free, like a thank you present for giving you NFS.

[Max]

"Without Sun's NFS NetApp would never-ever be where it is now."

NFS is a protocol, not an implementation.

True, if Sun made a better NFS server, NetApp wouldn't be in business.

But they didn't, and with that track record I bet their WAFL clone FS is going to be equally mediocre. ;-)

[Mike]

"But they didn't, and with that track record I bet their WAFL clone FS is going to be equally mediocre"

This time around, the "clone" might be better than the original.

NetApp depends on the success of its NAS products, and here ZFS will hurt the most.

[Max]

"The Dec 14 2006 email cites your Oct 2006 letter pointing out the WAFL patents and goes on to request additional information from you in the form of a claim chart, as well as a meeting to further discuss your claims."

Not my interpretation of the letter. The proposed meeting had nothing to do with NetApp's claims, only Suns proposal for their cross licensing extor^H^H^H^Hagreement.

At this point, Schwartz's versions of events only exist in the blogosphere, no official court provided documentation communicating Sun's formal response has been provided.

Seeing as it's reasonable for folks to have different perspectives on events, what was Sun's intention on "proposing" charging NetApp any money *at all* for their patents?

Simply couching the request in passive language does not make the intent any less clear in my mind... and this is typical Sun MO in my experience.

Also, I'm getting pretty sick and tired of the SCO comparisons, this is FUD pure and simple.. esp. coming from a Company that crawled in bed with SCO. (google sun-sco agreement). Irony cuts both ways, don't it?

Major obvious differences between the two "incidents":

SCO wanted to drag the thing out forever, weren't specific at all about their infringement claims, and they didn't file their case in the same jurisdiction as this lawsuit, which has a reputation primarily for *rapidly* resolving claims instead of stretching out the process unnecessarily; "patent troll" epithet aside.

Seems like the goal here is a speedy resolution, win or lose.

[Min]

"a Company that crawled in bed with SCO. (google sun-sco agreement)"

What I find from that Google search is that Sun licensed some x86 device drivers from SCO for a relatively trivial amount of money. ("The total value of the Sun and Microsoft deals was $13.2 million." Which company do you think paid more?) This of course was immediately conflated to "OMG! Sun is funding SCO's attack on Linux!" Which I don't get from that at all.

[Max]

"What I find from that Google search is that Sun licensed some x86 device drivers from SCO for a relatively trivial amount of money."

So they got to put the screws to Linux for a trivial amount of money, neat. Why do you think Sun bothered to go along with this in the first place? If Sun's so into Open Source, why gang up on Linux with, of all people, Microsoft *and* SCO? The symbolic dividends paid off handsomely in this case.

It's chutzpah on Sun's part to claim they've been SCO'd when the whole SCO debacle was exacerbated in large part by Sun & Microsoft actions. The dollar amount paid is irrelevant.

"OMG! Sun is funding SCO's attack on Linux!" Which I don't get from that at all.

What did you get out of it then? That Sun can't write their own device drivers?

If they can't do that, and needed to license it, do you actually expect them to write their own file system?

[David Hopwood]

[Posted to both blogs.]

As others have pointed out, the main ideas behind copy-on-write and always-consistent-on-disk filesystems, such as WOFS, LSF, and Tux2, clearly predate both WAFL and ZFS. The "Primäre Superblock" in WOFS, for example, plays the same role as the "root node" in WAFL or the "überblock" in ZFS. Most of the other claims described in the patents are trivial applications of general-purpose data structures to filesystems. So none of the 10 patents involved in this dispute should ever have been granted.

(Even to the minority of the technical community who think that software patents should be reformed rather than scrapped entirely, these particular patents are not defensible.)

Both companies are trying to spin the history of this patent dispute in their favour, as you'd perhaps expect. But if you dig a bit deeper, it's worse than that -- there are inconsistencies in each story indicating that one or both must be untruthful, and my impression is that it's both. In NetApp's case, they make a cynical attempt to claim opposition to software patents despite having form in using them offensively (e.g. against BlueArc). In Sun's case, trying to extort ~$36.5M out of NetApp for the StorageTek patents (see http://www.netapp.com/go/Sun%20Lawyer%20Email.pdf) is very far from "not demanding anything". Neither company comes out with any credit, and regardless of the legal outcomes, both deserve to lose from this affair in the court of public opinion.

[Min]

Saying that "Sun ganged up on Linux with Microsoft and SCO" is a pretty wild statement to make with not a whole lot to back it up. I'd guess that Sun has given more money to Red Hat and SUSE in Linux license revenue than they ever gave to SCO.

"What did you get out of it then? That Sun can't write their own device drivers?"

How about "it's cheaper -- and more significantly, faster -- to acquire the drivers from someone who already has them" ?

"If they can't do that, and needed to license it, do you actually expect them to write their own file system?"

I hope you're doing some warm-up stretches before you take leaps like that.

[max]

Saying that "Sun ganged up on Linux with Microsoft and SCO" is a pretty wild statement

It is not. I doubt you'll disagree that Sun and Microsoft both licensed the patents at the height of the SCO legal campaign. This is a fact, and it's a perfectly reasonable conclusion given Sun's track record as it relates to Linux.

If you can prove that Sun's actions were wholly unrelated, then do so, instead of simply dismissing it as a "wild statement."

How about "it's cheaper -- and more significantly, faster -- to acquire the drivers from someone who already has them" ?

And they did this at the height of the SCO trial? Do you really think it was just device drivers they bought, or was it press releases like this:

http://www.eweek.com/article2/0,1895,1785664,00.asp

[Min]

"I doubt you'll disagree that Sun and Microsoft both licensed the patents at the height of the SCO legal campaign."

What patents? According to the article, Sun licensed some device drivers. No patents mentioned.

"was it press releases like this:"

So in this article (not press release), Darl McBride said he told Sun he was peachy keen with them open sourcing Solaris.

I was talking to Toyota the other day, and I told them I think they're good to go with releasing the next Camry. That has about the same standing in my mind, since Darl McBride had absolutely no say in whether or not Solaris was open sourced, given that Sun bought out their source code rights from Novell in the 1990s, *before* Novell sold their UNIX business to old SCO (who later sold it off to Caldera, which now operates under the name SCO.)

So here's what we know. Sun has owned the source rights to their UNIX distro, free and clear, since the mid-1990s. A few years back, they paid Caldera/SCO for some specific device driver technology, and at the same time two things were happening: Caldera/SCO was waving their patent portfolio around, and Sun was trying to jumpstart their Solaris x86 business.

You *could* conjecture that Sun made this payment so that Sun, Microsoft and SCO could gang up on Linux, or you *could* conjecture that Sun was buying device drivers for their x86 operating system, when they were in a need to build up their driver support, and fast. Neither of these motivations are proven, or provable, or disprovable, that I can see. Either way, it was a pretty tone-deaf move on Sun's part, but I don't think it was a grand cabal. ("Grand" costs more than $13 mill :-)

[TomT]

I think there needs to be equitable punishment
for whoever turns out to be at fault here.

I propose that if Sun is at fault, Jonathan
loses the ponytail.

If NetApp loses, Hitz shaves his head.

Wait, we've seen this before, Sun *MUST* lose!

[Michael M]

So, why did you file this lawsuit in Texas? If you're so open and reasonable (and you do sound pretty reasonable), why would your company, based in California, file a lawsuit against another California company in Texas? The facts just don't line up...

[JohnQ]

Dave Hiltz wrote:

-----
Jonathan stated that Sun never "demanded anything". In this e-mail, Sun's lawyers claimed that we violated their patents (that's what "mapping its patent claims onto NetApp products" means, and demanded $36.548M as a result (that's what "cross license in exchange for payment from NetApp to Sun" means).

-----

Sequence of events (??)

1) NetApp tries to buy some patents from StorageTek (through an intermediary)

2) Sun, meanwhile, acquires STK and says "no, we don't want to sell you the patents (ie transfer ownership to NetAPP), but we'll cross-license them to you for $34mil.

3) NetApp says, "get bent, we don't want those patents anymore. And by the way, here are the NetApp patents that YOU violate!"

Did I get that right?

The Sun email you reference in your blog is basically step #2.

But the REAL $34 million question, Dave, is:

What patents were you trying to buy from StorageTek in the first place, and were you attempting to buy them because certain NetAPP IP is/was using them?

The answer to THAT question is the real smoking gun in this whole mess.

[David V]

My question is, Will this lawsuit affect our stock?