The NetApp Litigation (continued)

Today, we filed a second complaint against NetApp for infringement of six additional patents and other related claims. Although it may appear a separate case, it is in reality, part of the same litigation originally brought by NetApp in Eastern Texas to impede the adoption of ZFS. There are many theories as to why NetApp chose this particular venue, but because they sued Sun in that location we were forced to respond there. And, that is what we did last Thursday.

The case we filed today is in the Northern District of California. While we dislike the fact that we are forced to litigate this matter at all, we believe California is a more appropriate forum for any dispute between Sun and NetApp. Why? For starters, our companies are headquartered less than 10 miles apart here in Silicon Valley. All of the key witnesses in this case are located here, as are our attorneys. The same for most of the documentary evidence. And, almost all of the technology in dispute was developed here as well.

So to us, it makes more sense in terms of efficiency and economy, that this case be litigated here. With this in mind, we will be bringing a motion before the court in California asking that the case filed in Texas be consolidated with the case filed by Sun today for trial here in the Bay Area. Bottom line, this move would be in the best interest of all parties involved…especially our respective shareholders. We hope that NetApp agrees.

The NetApp Litigation

The shift from “proprietary” to “open” business models continues to accelerate. Nowhere is this more apparent than with software. Sun went through this transition several years ago. It was a difficult undertaking (a serious understatement). However, we saw the direction of the industry and committed the company to the transformation. It’s probably one of the most important and positive decisions we’ve ever made. Unfortunately, for some companies this same course remains unthinkable.

Last month, Network Appliance (NetApp) sued Sun alleging that Sun’s ZFS technology infringed NetApp patents. Today we filed our response. A PDF copy can be found here.

We had no notice of NetApp’s intent to bring this litigation and found it strange that they chose this course so unexpectedly. We were also surprised by NetApp’s attempt to impede the adoption of ZFS. Obviously, they have business reasons why they believe they need to so so; however, ZFS was announced over three years ago. It has been in the open source community since November, 2005. So, why now?

We invest an enormous amount of money on innovation – on average 15% of revenue. As part of this, we also invest in various intellectual property protections for this innovation, including patents, copyrights and trademarks. This investment allows us the flexibility to protect ourselves and others. In this case, we intend to use our very broad and extensive patent portfolio to protect the open source community that has embraced ZFS and made it so successful.

I’ve previously shared my perspective on litigation. The points I made then apply equally to this case, including that a non-judicial resolution is always preferable. To this end, previous to filing our response, I spoke to my counterpart at NetApp. We had a very polite and engaged discussion about what lay ahead for both companies. However, in the end, we were not able to see a path to resolution.

We have reviewed the NetApp claims against ZFS and we believe them to be without merit. (To those of you who have already been sending us prior art – “thank you”. To those of you who would like to lend your support, please go here.)

In our response we address not only the case brought by NetApp, but we have also brought our own claims against the entirety of their product line and are seeking both damages and injunctive relief. It’s a responsive action we take not because we want to, but rather because we are forced to. That said, we would like to use this litigation not only to protect, but to promote innovation as well. To this end, we have announced that we will be donating a portion of whatever Sun recovers to organizations supporting the open source community.

It is disappointing that we have to turn to litigation. But, it’s clear that NetApp views the open source world much differently than Sun. We’ve made the transition – they can’t contemplate it.

Have a question about licenses – ask your teenager.

I recall working on my first software license over twenty years ago. At that time the concept of a “license” was alien to most attorneys. And, when I explained to friends that I was a “licensing attorney” some thought I worked here. (Unfortunately, I’m not making that up.)

Thus, I am still fascinated by how the concept of a “license” is becoming fully integrated into mainstream culture. Here’s a recent example in which a photograph of a young woman posted to Flickr was used by Virgin Mobile in an advertisement. Flickr uses a Creative Commons license and the individual who posted the photograph apparently did not understand the specific terms of the license used for the site. Obviously, the subject of the photograph was quite surprised to find that she was appearing in a bus stop advertisement for Virgin Mobile.

What I find most interesting here are not the specifics of the laws that apply, but rather how the Flickr community quickly responded and in a very knowledgeable fashion. Collectively, they cover most of the legal analysis that previously could only have been provided by an experienced licensing attorney. Yes, some of the posts are incorrect or inappropriate, but the overall level of legal awareness they represent is so much higher than at any time in the past.

Given the significant growth of social networking sites and developer open source communities, public awareness of licensing will continue to grow. With individuals also increasingly becoming content creators (ask your teenager whether they are creating anything online), it’s only a matter of time before most people understand the laws relating to licensing as well as they do the laws covering how they drive their cars.

Monetization of Music (continued)

I’ve previously written about the transition occurring in the music industry. There was a great illustration of this last week as seen in the juxtaposition of two news stories.

In a glimpse of the future, Radiohead announced that they are releasing their current album only through their website and without DRM. But the decision that surprised many in the industry is that the group is leaving it to their customers to establish the price they want to pay for the band’s latest release.

And, in a reflection of the past, the RIAA prevailed in a copyright infringement case against a woman in Minnesota accused of file sharing of music. Out of the thousands of individuals who have been sued by the RIAA, this was the first case to go to a jury.

(Eco)ology – (Eco)nomics

We recently installed solar panels on our roof at home. Hopefully, they will be sufficient to generate power for all of our electric needs – plus a bit more. I’m waiting for plug-in hybrids to become available and it would be nice to cover the energy used for my commute and home with a single system.

A few weeks ago, I showed the system to my Dad (whom I will lovingly refer to here as “Mr. Curmudgeon”). I hoped he would share my excitement. Instead, his interest was only in the financial aspects of the system. When I told him that it would take more than a decade for the system to cover its costs, Mr. Curmudgeon questioned why I would make such a poor investment.

My reply was that it wasn’t a financial decision – it’s about the environment. My family is fortunate enough to be able to purchase at the early stage of the adoption cycle. While that’s the point when technology is the most expensive, our feeling is that if enough of us do this, it will help to create demand, drive down costs and lead to broader deployment of solar power. The bottom line, as I told Mr. Curmudgeon, is that it feels like the right thing to do.

As a company, Sun is also doing many things that are the “right thing to do”. These include everything from moving to recycled paper products in our cafeterias to expanding the availability of Sun buses for employees using mass transit. These things make us feel good as employees, but as with my solar panels, are at this point, mainly symbolic.

One of my colleagues recently stated: “It’s not about the environment – it’s about economics.” And, this is the real point I think my Dad was trying to make. Good intentions are great, but widespread change occurs only when the financials make sense. Which is why many of us are especially enjoying working at Sun today where we have so many opportunities to do “the right thing” from both a environmental and economic standpoint.

Here are a few examples. Sun has reduced the size of our datacenter footprint by 62%. This results in lower real estate costs and reduced electricity consumption for cooling and power. There’s a good video about the project that you can find here. The design of the datacenter is very innovative (we received a nice award for it), but it’s our products that are the real story. The SPARC Enterprise T2000 is one of these – it uses a third of the energy of comparable systems. If you’re operating a datacenter filled with thousands of servers, the expense of cooling and power may be more than the cost of the equipment. With products like the T1000 and T2000, companies need far less equipment and can save on real estate and electricity.

The SunRay client is another example. These systems use less power than a standard night light (4 watts v. 80 watts for a standard PC). And, many of our employees use a SunRay at home.

Which leads to another interesting item. Over 50% of our employees (and I’m one of them) don’t have a dedicated office. They work from home or use drop-in offices. This minimizes employee commute time (estimated savings of 30,000 tons of carbon emission) and the amount of real estate we need to power.

And, finally, I should mention that Sun is one of the first companies to take advantage of the SEC’s new “Notice and Access” rule. This allows us to provide proxy materials to stockholders electronically rather than in printed form. The result is a nice cost savings for the company and a much reduced impact on the environment (we printed 800,000 copies of our proxy materials last year).

All my way of saying, perhaps, Mr. Curmudgeon had a point.

I’ve been receiving calls from attorneys who want to learn more about what their clients can do in the “eco” area. Dave Douglas is Sun’s Vice President of Eco Responsibility. His blog is a good resource for additional information.