In 2006, when Microsoft Corp. stated that the Linux kernel and other software’s violated their patents, deal has been struck between the FOSS community and Microsoft. Some customers actually entered into direct patent licenses with Microsoft and including some "major brand-name companies" in financial services, health care, insurance and information technology. (He says they don't want to be identified, presumably because they fear angering the FOSS community.) Others wanted Microsoft to work out the patent issues directly with the commercial distributors like Red Hat and Novell. (Red Hat has about 65 percent of the paid Linux server market, according to IDC, while Novell has 26 percent.) Microsoft and Novell agreed not to sue each other's customers for patent infringement. That would be okay, because it's something that the GPL does not address. On those terms, Novell agreed to give Microsoft a percentage of all its Linux revenue through 2011 (or a minimum of $40 million). The pact also included a marketing collaboration. Microsoft agreed to pay Novell $240 million for "coupons" that it could then resell to customers (theoretically for a profit), who would, in turn, trade them in for subscriptions to Novell's Linux server software. In addition, Microsoft gave Novell another $108 million as a "balancing payment" in connection with the patent part of the deal. It might seem counterintuitive that Microsoft would end up paying millions to Novell when Microsoft is the one trying to get royalties for its patents. Microsoft's explanation is that this balancing payment was calculated as it would be in any cross-licensing deal: Novell has valuable network-computing patents that Microsoft products may infringe, and since Microsoft's products bring in so much more revenue than Novell's, Microsoft owed a balance. Microsoft and Novell unveiled their pact on Nov. 2, 2006 accompanied by endorsements from big Linux patrons and users like IBM, Hewlett-Packard, AIG, and - most startlingly - an organization called the Open Source Development Lab. The imprimatur of OSDL, a consortium of corporate Linux patrons (which has since merged into the Linux Foundation) Microsoft was selling coupons that customers could trade in for Novell Linux subscriptions meant that Microsoft was now a Linux distributor. And that, as Eben Moglen (longtime counsel to the Free Software Foundation and the head of the Software Freedom Law Center, which counsels FOSS projects) saw it, meant that Microsoft was itself subject to the terms of the GPL. Microsoft and Novell both vow to proceed with their deal as planned. Microsoft claims that its mere distribution of coupons won't make it subject to the GPL, as Moglen asserts. But even if Microsoft is right about that, there's no doubt that distributors remain subject to it, and Moglen's revisions will bar them from trying to strike deals like Novell's. This will be bad news for big corporate customers, which, judging from early reports, like the Novell deal. Presumably at least part of its appeal is that it provides peace of mind about Microsoft's patent claims. In the first six months, such marquee clients as Credit Suisse, Deutsche Bank, AIG Technologies, HSBC, Wal-Mart, Dell and Reed Elsevier have all acquired Novell Linux coupons from Microsoft. Microsoft had hoped that the Novell deal would become a model it could use to collect patent royalties from other distributors of free software. In that respect, its "bridge" to the free world appears to have failed. At this time there is a gentleman truce, between Microsoft and the FOSS community both fear patent infringement suits from the other.