NetApp - Dave's Blog

Current Status of the Sun/NetApp Patent Lawsuit

I hadn’t planned to blog any more on the Sun/NetApp patent litigation, but Mike Dillon, Sun’s General Counsel, has recently made some very optimistic posts (here and here), and I need to respond. Dillon shared the results of some pre-trial wrangling—Markman hearings and preliminary Patent Office decisions—but sometimes when you focus on intricate details, you miss the big picture. (For background on the lawsuit, see here, here, and here.)

To me, the best indicator of strength is to look at which party wants to get on with the case (the one with a strong position), and which party consistently drags its feet and tries to delay (the one with the weak position).

Sun is requesting a “stay,” which is a request to put our claims on hold and delay the trial, because the Patent Office has issued a preliminary rejection of claims in 3 of our patents (out of 16). Such a ruling is not unusual for patents being tried for the first time, and there are two ways to resolve the issue. Waiting for the Patent Office, which is what Sun wants to do, is the slow way. The patent office currently has a backlog of 730,000 patents, and they can’t hire fast enough to close the gap. Waiting could take years. The legal system isn’t always fast, but it can be. When NetApp agreed to relocate the case to California, we did it on the condition that we’d get to trial relatively quickly. Dillon mentioned issues with three patents, but NetApp currently has 16 WAFL patents that we believe apply to ZFS, with more on the way. We believe that we have a strong case, and we want to get it resolved.

As I have said in earlier blogs, I like open source. In fact, I have personally written and contributed open source code! NetApp has also made many corporate contributions. However, I believe that open source contributors must always follow one critical guideline: Only give away things that belong to you. This is where we think that Sun isn’t playing by the rules.

Here’s the big picture. If you were Sun, and if you were confident in your case, wouldn’t you want to clear the name of ZFS as quickly as possible, to reassure your customers and partners? By contrast, if you were NetApp, and you had no confidence in your patents, wouldn’t you try to slow things down to maintain the cloud of doubt as long as possible? I believe we have a strong case, but whether we are right or wrong, isn’t it best for everyone involved to get the answer as quickly as possible?

Lessons from the Last Crash

In the past two weeks, I've had lots of people ask me how I think the financial meltdown will affect things. I don't have a crystal ball, but I thought it might be interesting to look back to the tech crash in 2000/2001.

I remember one of our executive staff meetings in particular, where it became clear how bad things were getting. One of the topics of the meeting was how sales were going, and Rob Salmon, who ran world-wide sales at the time, described an ugly picture. We were still winning deals, at least according to the lower level decision makers, but when it came time to collect the purchase order, we would find out that the CFO, or even the CEO, had frozen the funds at the last minute. It wasn't that anyone else was taking the business: the business was simply disappearing, or at least being delayed.

The executive staff meeting continued, and an hour or so later we had a status update on a big business software project that we were working on. I can't remember exactly what it was—ERP or CRM or something like that. Anyway, about twenty minutes into the conversation, Dan, our CEO, interrupted and said, "I don't think it makes sense to do this right now. It's just too expensive, and given the economic situation, too risky." The IT people giving the presentation said, "But it’s been approved. We already committed to our vendor!" Dan's response was, "It's not too late to cancel." That was that.

From the other side of the room, Rob Salmon groaned. He said, "I bet this is exactly the same conversation that is going on at our customers, right before they tell us that the deal we thought we had won just disappeared.

That was in 2001, but I have a hunch that the same conversation is going on in boardrooms all around the country. All around the world, for that matter. Remember, it's only two weeks ago Monday that Lehman collapsed. It seems pretty likely that CEOs and CFOs will reconsider, or at least delay, any big decisions that they can, even if they haven’t told their staff yet.

I’m curious about peoples’ experiences at different companies. What has the boss said so far?