Digging a Little Deeper into TurboHercules/IBM - OpenMainframe.org and Microsoft

Digging a Little Deeper into TurboHercules/IBM - OpenMainframe.org and Microsoft - Updated

By Pamela Jones
Groklaw

April 11 2010

When IBM said that TurboHercules was a member of organizations Microsoft is a member of, it was particularly talking about OpenMainframe.org [ http://openmainframe.org/ ]. It's an organization that seems dedicated to attacking IBM's mainframe business. It describes its purpose like this:

OpenMainframe.org is a forum for exchanging news, views and information related to creating an open market for IBM-compatible mainframe solutions....In the interest of helping mainframe customers, we believe the public should be made aware of how IBM’s actions harm consumers who rely on mainframe systems and services.

So it's an anti-IBM organization. You'll see they are currently highlighting TurboHercules. Their news archive on their home page is all about TurboHercules, but it doesn't include Groklaw's coverage [ http://www.groklaw.net/article.php?story=20100408153953613 ]. Neither does TurboHercules [ http://www.turbohercules.com/in_the_news/ ]. I find that a telling omission, frankly. If you only include positive articles from your own viewpoint, it's more like Microsoft's "Get the Facts" web page, pushing a point of view by telling only part of the story, and in that case not always so fairly. That could be more than a coincidence, since IBM says Microsoft is the force behind OpenMainframe.org, as I'll show you.

However, OpenMainframe.org has on its website a number of legal documents [ http://openmainframe.org/downloads/legal-documents/ ] that you may find helpful in digging a little deeper into the TurboHercules-IBM conflict.

In particular, they have some documents from the PSI/T3 case that was terminated in IBM's favor in September of 2009. One document in particular explains some things about antitrust law, and in fact it makes me suspect that TurboHercules chose the EU Commission instead of filing in New York State precisely because it would not likely have succeeded in New York, where T3 lost. Let's take a look at why they lost, because it relates to the refusal to give a license issue.

Here's the document, the Memorandum Opinion [ http://www.groklaw.net/pdf2/2009-09-30_IBM-T3_memorandum_opinion.pdf ] in IBM v. Platform Solutions, Inc. and T3 Technologies, which explains why T3's antitrust complaint against IBM, which included complaining about refusal to deal, ultimately failed. It failed for a lot of reasons, in part because T3 tagged along with PSI, intervening as a defendant in the case, and when PSI was bought by IBM, it impacted T3's standing. If you read the whole document, you'll see why, but I want to focus on something else.

Interestingly, I read the memorandum as saying that PSI could not have prevailed on such a claim -- refusal to license -- even if IBM had not bought them. I take that as an indication neither would TurboHercules in New York. Let me show you the wording that drew my eye, the section on Refusal to Deal beginning on page 19:

II. Refusal to Deal
T3's lack of antitrust standing is dispositive. But its claims would fail in any event. For even assuming arguendo that T3 had antitrust standing, its claims would fail because it cannot establish that IBM's refusal to deal with FSI and PSI is actionable under the Sherman Act.

The antitrust laws do "not restrict the long recognized rights of [a] trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal." Nevertheless, that right is not unqualified. A refusal to deal with a rival can violate the Sherman Act if a party terminates a "voluntary (and thus presumably profitable) court of dealing... to forsake short-term profits to achieve an anticompetitive end."

In that case, the allegation was based on IBM refusing to renew a license to someone who had a license that ran out, and then when PSI sought a license to the same upgraded code that TurboHercules wants to license, z/OS, IBM said no, and yet IBM still prevailed in that litigation. You can read how T3 spins it in an article [ http://openmainframe.org/featured-articles/the-t3-technologies-story.html ] by Steven Friedman, President of T3, highlighted on OpenMainframe's homepage. How likely, then, is it that TurboHercules could prevail, where PSI and T3 couldn't, when it can hardly claim it fits under that limited exception to the right of any company to decide who it wants to license to, when TurboHercules had no prior license to complain about?

It looks like in NYS, then, TurboHercules would have no case on that point. So off to Europe where the laws are not identical to US antitrust law? In fact, Friedman's article indicates that T3 filed in Europe as well, but I don't see him even mentioning that he lost in New York. Instead he says this:

IBM, for no reason other than to remove all competition from the mainframe market, eliminated programs to allow customers to buy IBM mainframe software for use on non-IBM mainframe solutions and took legal action to shut down PSI. When PSI countersued IBM and filed complaints in Europe and the US, IBM decided in July 2008 it was easier to just buy PSI and take them out of the market rather than fight them in court and risk waking up the anti-trust authorities in Europe and the US. With both PSI and FSI taken out, we are effectively no longer able to pursue new business with either of our IBM-mainframe-compatible product families. Again, I would like to stress that this is not because our products don’t work. This is strictly because IBM – through its actions and licensing decisions – will not allow us to exist.

That is not at all what the judge ruled in the New York case. He said IBM had upgraded to 64-bit, spending a fortune to do it, that it had no obligation to continue to support an earlier product, that T3 lacked standing, had no antitrust injury and that IBM has the right to decide who to license to, and on top of that I read it as indicating IBM didn't need to buy PSI, because it would have won anyhow. Here is the part about not needing to support older products:

The chief and perhaps only product in question was another IBM-compatible server called the Liberty Server, which was comparable to the tServer in an important respect. It was an Intel-based machine that used PSI firmware to emulate IBM's z/OS operating system. In consequence, the Liberty Server could run applications and programs designed to run on the z/OS operating system despite the fact that the Liberty Server used an Intel rather than an IBM processor. But PSI too required a license from IBM for the z/OS operating system in order to make its product available without infringing IBM's rights.
T3 claims that PSI sought such a license and... that IBM in 2006 ultimately refused to license z/OS to PSI. As a result of IBM's decision not to license z/OS, T3 sold only five Liberty Servers....

T3 contends that IBM's decision "to cease a prior course of conduct" violated the antitrust laws. Specifically, it challenges IBM's decisions to stop freely licnesing it patents and supportig its OS/390 operating system. According to T3, IBM had "no legitimate business reason" for changing its patent licensing practices," and "its sole purpose was to suppress competition from a more favorable technology."

T3, however, cannot satisfy the "limited exception" to the refusal to deal doctrine. Specifically, T3 has not demonstrated that IBM has foregone short term profits by refusing to license its patents "to achieve an anticompetitive end." IBM invested billions of dollars to develop its sixty-four bit operating systems, which contain numerous technical improvements.... It introduced them to make its operating systems more functional and competitive with distributed systems as the market for thirty-one bit technology waned. In these circumstances, IBM is not required to support and maintain its thirty-one bit technology. IBM's refusal to support and license its operating system to FSI and PSI therefore does not constitute anticompetitive conduct under the Sherman Act....

For the foregoing reasons, plaintiff's motion for summary judgment dismissing T3's complaint... is granted. As this terminates the last open claims, the Clerk shall enter final judgment and close the case.

But it lives on as a FUD item on OpenMainframe.org's site, which certainly does not highlight this ruling. Read it for yourself, the entire memorandum, though and form your own opinion as to the accuracy of Mr. Friedman's characterization. Perhaps he needs to update that article to make it clear T3 lost and that the reasons it lost rebut what he wrote.

As to why they are all piling on IBM, might this be the reason [ http://openmainframe.org/mainframe-and-the-cloud/ ], that they think there will be big money in mainframes and the cloud? As OpenMainframe.org's article puts it:

“Cloud Computing” is getting a lot of coverage in the press and from industry analysts these days. Cloud Computing has the potential to offer customers the ability to rapidly scale computing resources based on demand and to save IT organizations money by offloading the cost of capital purchases and IT administration to service providers. Virtualization and automated provisioning will play key roles in helping vendors deliver the exact resources their customers need in a streamlined way.
Some experts say Cloud Computing will be the next new paradigm for enterprise computing – some say it is just a re-birth of ASP (Application Service Provider) or timesharing computing. Numerous models have emerged from the biggest players in the IT world to provide software, infrastructure, platform, and storage as a service. Some vendor models define Cloud Computing as IT services provided by off-premises datacenters, some define Cloud Computing as a remote extension of traditional on-premises datacenter computing and some define it as Software plus Services.

As a matter of fact, HP and Microsoft in January announced [ http://www.crn.com/it-channel/222301229 ] they have agreed to partner in the cloud:

Microsoft and HP talked up some gaudy numbers -- specifically, the two companies will be investing $250 million over three years to better integrate Microsoft products like Microsoft Exchange Server, Microsoft SQL Server and Microsoft Hyper-V with HP's server, storage and networking hardware, while devoting 11,000 sales reps to pushing the resulting bundled technology stacks....
As Ashlee Vance of The New York Times put it so aptly, the core communication seemed to be "that Microsoft and HP have formed a really, really, really tight relationship that supersedes their previous really, really tight relationship."

Coincidentally, IBM gets knifed in the back just in time for this partnership to prosper, eh?

You can get a little insight into OpenMainframe.org from this article [ http://www.tradingmarkets.com/news/stock-alert/ibm_ibm-accused-of-mainframe-monopoly-850478.html ] about allegations of monopoly of the mainframe market in India:

IBM was quick to denounce the report. It alleged that OpenMainframe was the actual author of the report. "OpenMainframe.org is bought and paid for by Microsoft and other IBM competitors, so it's hardly surprising that it would be making an anti-IBM argument. This report has no credibility," an IBM release said.
There is some truth in the allegation. The website OpenMainframe.org shows that it's a forum that has the objective of creating an open market for IBM-compatible mainframe solutions. "In the past, there have been multiple vendors for IBM-compatible mainframes, including companies such as Hitachi, Amdahl, Comparex, Platform Solutions and T3 Technologies. Today there is only one viable company selling IBM-compatible mainframes: IBM," the website says. It also goes on to thank Microsoft, T3 and others for their support in helping to make the website "a reality".

IBM said that to call its mainframe a monopoly is "silly."

"IBM servers face vigorous competition. In fact, only a decade ago, the IBM mainframe was on the verge of extinction because of competition from Wintel and other distributed platforms that still heavily dominate the market. But by investing billions of dollars in research and development, IBM improved the mainframe platform and enhanced its competitiveness," the release said.

It then goes on to say that IBM had regularly lowered the prices paid by clients for doing work on the mainframe. "As a result, IBM's clients have benefited from innovation on the platform, and an alternative to Unix and Windows has been preserved. Continuous quality improvements and reduced prices are not what one would expect from a so-called monopoly," it said.

The article goes on to say that the report alluded to was sponsored by OpenMainframe.org:

The report, sponsored by Open-Mainframe, says IBM has a 50 percent share of the high-end computer market in India, while HP has 33 percent and Sun Microsystems 17 percent.

I can't help but notice that the proposed business plan that TurboHercules pitched to IBM mentioned its turnkey solution [ http://www.turbohercules.com/solutions/turnkey_product/ ], the hardware/software offer, and that product offering includes HP hardware. What is HP's role in all of this? To be determined. It does make me wonder, though, when I read on OpenMainframe.org's site that this is all a push to open up standards in the mainframe market. Since when does Microsoft care about that? And may I ask why OpenMainframe.org doesn't list who owns the site and who the membership consists of? I can't find an About Us page and even the domain name registration is a private registration, so the owner can't be identified. Now, bloggers do that, so that netkooks don't show up on their doorstep and harm their children, but a trade organization? I can't find anything about Microsoft's involvement on the site. What? They're not proud of their handiwork?

This CRN article [ http://www.crn.com/software/212901760;jsessionid=4ONIOU4BJIJMJQE1GHRSKHWATMY32JVN: ] from January of 2009 shows that Microsoft invested in T3 and PSI, while it denied it has anything to do with them afterwards suing IBM. And you know Microsoft is known for always being as honest as the day is long, particularly in competitive matters:

Microsoft could be the driving force behind the latest antitrust complaint filed against IBM, according to an industry watcher who sees similarities to previous suits against Big Blue. However, Microsoft denies that it's involved in the case....
Waters notes Microsoft in early November invested an undisclosed sum in T3 Technologies that could be the financial fuel for its latest legal salvo....

Waters likens T3's situation to that of Platform Technologies, another mainframe solution provider that was sued by IBM in 2006 for patent violations, and, after getting a $37 million cash infusion from Microsoft and other investors, then turned around and filed antitrust suits against IBM in U.S. and European courts. IBM acquired Platform Technologies in July 2008 for an undisclosed sum.

We all know Microsoft would never fund a proxy's litigation against IBM. Oh. Wait. That's what happened with SCO. Hmm. Microsoft gave this hilarious statement to CRN, waxing poetic about openness:

"Like T3, Microsoft believes there needs to be greater openness and choice for customers in the mainframe market. Customers want greater interoperability between the mainframe and other platforms, including systems that run Windows Server," the spokesperson said.
"That's why we continue to invest in companies like T3 Technologies and other startups: to develop new solutions for our mutual customers."

Why, lookahere. Microsoft is fighting for greater openness and choice. They must have been struck by lighting or something, then, on the road to Damascus. I don't think that is otherwise what they've historically been known for. Here's the Richard Waters piece [ http://blogs.ft.com/techblog/2009/01/microsofts-money-backs-an-ibm-adversary-again/ ] in Financial Times:

Whenever a significant legal challenge is filed against IBM, it seems you don’t have to scratch the surface much to find Microsoft lurking somewhere in the background.
Take the complaint that has just been filed with the European Commission against IBM’s mainframe monopoly. T3, the Florida company that brought the case, was the recipient of a Microsoft investment just two months ago....

Is it paranoia to see a Machiavellian motive behind Microsoft’s investment? There is certainly a pattern here.

In November 2007, the software company was part of a $37m investment round in Platform Solutions Inc, another company that had tangled with IBM in court. The timing was interesting. Just two months before, Microsoft had lost its landmark anti-trust case in the European courts - a precedent-setting decision that encouraged PSI to turn to Europe as well (as we reported at the time.) Armed with the extra cash, PSI took its case to Brussels early last year, before eventually agreeing to be bought out by IBM.

The most famous example, of course, was Microsoft’s financial backing for SCO Group, which brought a lawsuit against IBM over alleged intellectual property infringements in Linux. Though ultimately unsuccessful, the SCO case cast a cloud for years over the potential IP pitfalls in Linux. Who knows how important that was in limiting the damage to Microsoft’s operating system business?

Indeed. And now, just as HP and Microsoft launch their new partnership, here come the clouds over IBM again. Here's an article [ http://www.crn.com/it-channel/222300861 ] about their joint press release about the partnership, and notice the focus:

Talk about a heavyweight card. Microsoft (NSDQ:MSFT) and Hewlett-Packard (NYSE:HPQ) rolled out their high-profile CEOs Wednesday to pitch a new technology stack collaboration for the data center that will see $250 million invested by the companies over three years and focus largely on cloud computing.
"The world is accelerating and the movement to modern data center approaches is absolutely accelerating. [And] that really means a movement to a cloud model based upon well-defined and well-integrated virtualization and management approaches," said Microsoft CEO Steve Ballmer, explaining why the Redmond, Wash.-based software giant was entering the partnership with Palo Alto, Calif.-based HP at this time.

Calling it "the deepest level of collaboration and integration and technical work" that Microsoft and HP have every embarked on, HP CEO Mark Hurd added, "It was time for us to really align our enterprise businesses."

Well-defined and well-integrated virtualization and management approaches, eh? Sort of like TurboHercules wishes to offer? I don't know if Microsoft invested in that company too or not, although I'd like to know. What I believe, though, is that this is a well-defined and well-integrated campaign, and Microsoft has a strong stomach. It doesn't mind using "open" for its own proprietary ends, and it doesn't mind using members of the Open Source community too, if it can find some to use. And it, sadly, sometimes does. But why would that be in the interests of the community at large? I see no possible benefit. And why, pray tell, would any FOSS person want to lie down in a bed of fleas like this one?

IBM is quoted by InformationWeek [ http://www.informationweek.com/news/hardware/supercomputers/showArticle.jhtml?articleID=224200318 ] saying this about OpenMainframe.org:

IBM also sees the hand of rival Microsoft behind TurboHercules' actions, given that TurboHercules is a member of an industry group, OpenMainframe.org, that's backed by the software maker.
"TurboHercules is a member of organizations founded and funded by IBM competitors such as Microsoft to attack the mainframe. Such an antitrust accusation is not being driven by the interests of consumers and mainframe customers--who benefit from intellectual property laws and the innovation that they foster--but rather by entities that seek to use governmental intervention to advance their own commercial interests," IBM's spokesman said.

IBM said it made a strategic decision to stick by mainframes in the 1990s, when other vendors were moving toward distributed and client-server computing, and now deserves to reap the rewards.

"Only a decade ago, IBM's mainframe platform was on the verge of extinction because of intense competition from other types of computing platforms. IBM invested billions of dollars in R&D--when everyone else left the market--to upgrade the platform, create a new generation of microprocessors, and develop improved mainframe technologies," IBM's spokesman said.

"The mainframe is a small niche in the overall server market, but customers benefit from an improved platform and alternatives to Unix and Windows. IBM is fully entitled to enforce our intellectual property rights and protect the investments that we have made in our technologies," the spokesman added.

So this is a group of folks who want to take some of IBM's business, I gather, or just damage it, and that makes all the holy talk of openness and standards to a new and rather disgustingly hypocritical level. What I think they want is a long, long PR opportunity. Do they even care if the litigation goes their way, if they get the cloud over IBM to last? Excuse my cynicsm, but I've been watching the SCO saga for seven years. That means all my cells are new. And I don't think Microsoft cared a bit about what happened in the end to SCO. It just handed them some money for, among other things, "patents" that don't exist, and then it enjoyed the FUD cloud that litigation inevitably creates for the victim.

Incidentally, there was a paper [ http://www.antitrustinstitute.org/archives/files/AAI%20White%20Paper%20on%20IBM.11.27_112720091758.pdf ] on the subject of refusal to deal by Professor Andrew Chin, and in IBM's answer [ http://www.antitrustinstitute.org/archives/files/IBM%20AAI%20Response_022420101229.pdf ] to him you can discern quite clearly what IBM's position is. For completeness, here's Professor Chin's response to IBM [ http://www.antitrustinstitute.org/archives/files/Chin%20response%20to%20IBM_022420101229.pdf ]. In particular, I wanted to highlight two points IBM makes:

The inventions disclosed by the IBM patents are embodied in IBM's mainframe hardware as well as its operating systems.
Professor Chin suggests a more benign interpretation of what these so-called "emulator" companies are attempting to do. As he sees things, they want IBM's intellectual property only to "interoperate" with IBM's mainframe system. Not so. IBM already discloses the information needed to interoperate with IBM mainframes -- indeed, most mainframe customers use their mainframes in data centers where mainframes, distributed servers, and other technologies co-exist and interact with one another on a continuous basis. But these "emulator" firms seek access to IBM's intellectual property so that they can copy it. Not unlike a street vendor selling "Gucci" handbags, they offer customers no new functionality or improved performance: they simply appropriate IBM's innovative technology for themselves and seek to profit from it. Sure, these firms boast of being the "cheap alternative" to the original -- just as do street vendors. But that is an easy trick when you can avoid sinking billions of dollars into uncertain research and development and just rely on the fruits of someone else's labor IBM, not surprisingly, is not interested in contributing to such an effort.

I take from that a direct comparison to the Psytar case. They wanted exactly the same thing, asserting that writing their own operating system was too hard, so they had to take Apple's in order to make some money. And it's distinguished from the SAMBA complaint against Microsoft, which was successful, in that they were not asking for any Microsoft code, only APIs, and they paid them for that too.

But notice another important fact, that IBM's patents are both hardware and software related. That's another reason why I don't think TurboHercules qualifies for the patent pledge, actually, even if Hercules alone could, because they are selling a hardware and software solution, not just software. The fact that some of their hardware implementation uses "open source" does not make them an "open source software distributor." What TurboHercules is offering is hardware, and the "open source" part of their hardware product is really microcode [ http://en.wikipedia.org/wiki/Microcode ]. In an IBM System z hardware product, as I understand it, there would be lots and lots of microcode (which we now call "firmware" in several flavors: millicode, i390 code, etc.) which is not distributed or customer-modifiable and implements the System z architecture. I simply cannot see why someone who built hardware offerings to compete with IBM's hardware implementation would be considered an "open source software distributor." And that is an important distinction between the open source project, Hercules, and the proprietary company that happens to include Hercules as part, but only part, of their offerings, TurboHercules.

Update: Brian Proffitt has the best overview [ http://www.itworld.com/open-source/104222/foss-claims-ibm-breaking-promise-seem-mostly-smoke-little-fire ] of this unfolding story so far, for those looking for a quick summary. The only corrections I would offer is I don't see Florian Mueller as a FOSS person, and I would note that TurboHercules's Roger Bowler has written [ http://www.turbohercules.com/news/permalink/a-statement-from-roger-bowler-about-hercules-and-ibm/%255C ] that they did in fact receive the IBM letter with the list of patents that Bowler had asked IBM to provide prior to filing the complaint against IBM with the EU Commission:

IBM complains in its press statement in response to our antitrust filing that we “seek to use governmental intervention” to advance our interests. However, we acted only as a matter of last resort. Indeed, just a few days before we filed the complaint with the European Commission, Mr. Mark Anzani, the CTO of IBM’s mainframe division, wrote to me to allege that the open source Hercules emulator may have violated no fewer than 173 of IBM’s patents or patent applications.

This contradicts the company's press release [ http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100323006004&newsLang=en ], which said IBM had refused to provide that information:

Not only did IBM deny our request, but it now suddenly claims, after ten years, that the Hercules open-source emulator violates IBM intellectual property that it has refused to identify.

Which is the truth? I don't know. But I know they attacked IBM in the press from both directions, meaning they intended to attack IBM no matter what IBM did. That ought to inform our opinions, don't you think? And I hope TurboHercules clarifies the conflicting stories and apologizes as appropriate, if they feel it would be the right thing to do.

11:14 AM EDT