The NetApp/Sun patent battle continues. I don’t see how NetApp can win this, given the Supreme Court’s Teleflex decision, which makes prior art a question that can be appealed all the way to the Supreme Court.
But the company is doggedly pursuing the battle, and Dave Hitz’s recent declaration – which he hoped would remain private – has been unsealed.
It is an illuminating document.
Dave early points to Sun’s Jeff Bonwick’s statement that NetApp’s WAFL was
. . . the first commercial file system to use the copy-on-write tree of blocks approach to file system consistency.
As if that proves anything. Sun is arguing that earlier non-commercial research experimented with those and other techniques, establishing the prior art and invalidating NetApp’s patents. One NetApp patent has already been removed from the litigation and I expect more to follow.
Fear and trembling
Hitz goes on to say
Because Sun is exploiting NetApp’s patented technology for free and creating interest in ZFS by giving it away for free, it does not have to cover the true cost of incorporating ZFS into the Sun Fire X4500 and marketing it. Sun is thus able to undercut NetApp’s pricing on a per gigabyte basis, like any counterfeiter. This negatively affects NetApp’s ability to compete in the storage space. In responding to normal market pressures, NetApp would have to consider shrinking its normal profit margins. Reduced profit margins in this marketplace can be permanent and difficult to quantify.
One would have to believe that if Sun were paying a reasonable license fee to NetApp the Sun Fire x4500 wouldn’t be competitive with NetApp’s products. That doesn’t compute: the x4500 is a box of disks with a commodity motherboard. It’s the packaging density and cost amortization across 48 drives that gives the x4500 its $/GB advantage.
NetApp could do the same tomorrow – and I hope they’re working on it. They’d enjoy the same cost structure as Sun. Sun still has all the costs of building, debugging and marketing a complex product so NetApp would have the cost advantage.
Losing in the court of public opinion
Dave later comments on the public campaign Sun is waging against NetApp:
I am painfully aware that IP litigation is not favorably viewed by many members of the open source community. Indeed, the mere paricipation in a lawsuit can bear a reputational cost. Aside from the obvious monetary costs of protracted litigation and the distraction of resources from normal business functions, if the Court grants Sun’s motion for a partial stay, NetApp will suffer irreparable harm to its reputation because it will prolong this whole matter rather than allowing for a prompt disposition.
Newsflash: NetApp has suffered harm and will suffer further harm no matter how this gets resolved. If they win, they lose. In the court of public opinion it would be better if they lost.
The court did grant the partial stay. And unsealed Dave’s declaration.
The StorageMojo take
So sad and unnecessary. I understand the impulse to protect one’s intellectual property. I’ve done it myself on occasion.
NetApp’s biggest misperception is that WAFL is somehow central to the success they are enjoying today. That was true about 10 years ago. Guys, your average F500 CIO today could care less about WAFL.
NetApp is growing because they offer a compelling value proposition of quality products, relevant services and worldwide support. WAFL certainly supports that, but as NetApp execs note much of their recent success is due to the integration software that NetApp now offers.
WAFL is a small piece of the picture. Sun could copy it line for line and still not have a quarter of what NetApp offers.
NetApp faces challenges. Storage commoditization threatens all vendors traditional 60% gross margins. The GX integration is problematic and the bottom line benefit uncertain. EMC’s move into cloud file services is a clever flanking strategy.
But letting fear drive you isn’t the answer. Boldness and innovation – NetApp’s traditional strengths – is the way to a profitable and high-growth future. Sun is a distraction, not a direction.
Comments welcome, of course. Disclosure: I’ve met Dave Hitz a couple of times and he is a genuinely fine person. If you think I’ve pulled some punches here that’s the reason.
Update: A commenter felt I didn’t get Dave’s point across because I’d edited the quote to what I – perhaps mistakenly – thought were the Most Significant Bits. Here’s the salient part of ⁋5 of Dave’s declaration:
5. Sun’s ZFS technology appears to be a conscious reimplementation of NetApp’s innovative WAFL filesystem, as admitted by the creators of ZFS: “The file system that has come closest to our design principles, other than ZFS itself, is WAFL . . . the first commercial file system to use the copy-on-write tree of blocks approach to fie system consistency.”
I still don’t follow the logic that Bonwick’s acknowledgment of WAFL’s technical features means that ZFS is a “conscious reimplementation” of WAFL. Evidently the judge wasn’t persuaded either.