But perhaps those restrictions were better left in place. Because on Thursday, the DOJ opened a preliminary investigation into IBM’s business practices, seeking to determine if the company has abused its monopoly position in the mainframe market. The inquiry stems from a complaint filed by the Computer and Communications Industry Association that claims IBM (IBM) has undermined sales of competing mainframe hardware products by refusing to license its mainframe operating system and certain other intellectual property.

“IBM has used its power to resurrect and create a formidable set of barriers in the mainframe market by their misuse of intellectual property,” CCIA CEO Edward J. Black, told the New York Times. “Once IBM walls are taken down by the government enforcing the law, there will be a rush of people looking to get part of this marketplace.”

Perhaps. Certainly that’s not really the case now. As the CCIA and T3 Technologies–which filed an antitrust complaint against IBM in Europe earlier this year for similar reasons–would argue, IBM has essentially left the industry with a single mainframe vendor: itself. And if that sounds like an exaggeration, consider this: A few years back, a company called Platform Solutions attempted to license IBM’s mainframe software. IBM refused and then sued Platform, accusing it of a raft of IP-related violations. Platform countersued. And then, in 2008, IBM acquired the company and promptly shut down its operations.

“For decades, IBM licensed its system software and intellectual property to other computer manufacturers,” T3 president Steven Friedman said earlier this year. “However, for no reason other than to remove all competition from the mainframe market, IBM eliminated programs to allow customers to buy its mainframe software for use on non-IBM mainframe solutions….[Now] only IBM…offers IBM- compatible mainframes and, based on IDC reports, controls over 99% of all existing IBM-compatible mainframes in use today.”

“The settlement would alter the landscape of copyright law, for millions and millions of rights holders of out-of-print books,” Peters said. “It would flip copyright on its head by allowing Google to engage in extensive new uses without the consent of the copyright owner–in my view, making a mockery of Article One of the Constitution, that anticipates that authors shall be granted exclusive rights.”

The settlement, as Peters sees it, will allow Google (GOOG) to profit from the work of others without prior consent. “It could affect the exclusive rights of millions of copyright owners, in the United States and abroad, with respect to their abilities to control new products and new markets, for years and years to come,” she said. “In essence, the proposed settlement would give Google a license to infringe first and ask questions later, under the imprimatur of the court.”

One of the more blistering attacks on the deal to date, especially given its source: The nation’s top copyright official. But Google nevertheless dismissed it as unfounded: “We think the settlement is legal, and we think it is structured well within the guidelines of what you can do in a class action settlement,” David Drummond, Google’s chief legal officer, said during the hearing. “It certainly is not usurping Congress’s authority to do whatever it wants.”

A typically arrogant response from Google, though the company does appear to be conceding a bit of ground in the face of widening opposition to the deal. Responding to Peters’s criticism and claims that the deal will essentially grant Google a de facto monopoly over out-of-print books, Drummond said the company plans to make those works available to any book retailer.

“For the out-of-print books being made available through the Google Books settlement, we will let any book retailer sell access to those books,” Drummond told the committee. “Google will host the digital books online, and retailers such as Amazon, Barnes & Noble or your local bookstore will be able to sell access to users on any internet-connected device they choose.”

Sadly for Google, that conciliatory gesture did not go over well with critics of the deal. “The Internet has never been about intermediation,” Paul Misener, Amazon’s vice president of public policy, said of the company’s offer. “We are happy to work with rights holders without anyone else’s help.”

The Internet Archive’s Peter Brantley was even more disdainful. “I fail to see what’s really new here,” he told the Los Angeles Times. “It’s like Macy’s telling Sears, ‘You can sell Macy’s clothing.’ There’s no fundamental change of the conditions under which Macy’s acquires those clothes. Google remains in control.”

That said, it’s also entirely possible that there will be no official announcement tomorrow. After all, we’ve been hearing reports like those above about the Apple (AAPL) iPhone in China for quite a while now and these negotiations are quite complex. As Dan Butterfield at iPhonAsia notes, “I am skeptical that an Apple/China Unicom iPhone deal announcement will come on Friday as there are likely two iPhones in the approval pipeline–models A1324 and A1325. The WiFi enabled model (A1325) may still be in CTTL testing and Apple may not want to make a deal official until both iPhones have received their network access licenses, which could take another month or so.”

“For the last several months, we have consistently stated and maintained that our System V code is in Linux,” McBride explained. “The claims SCO has are both broad and deep. These claims touch not just IBM but other vendors as well. They also touch certain industry consortia and corporate Linux end users. Our claims aren’t trivial. The violations of our intellectual property are not easily repaired. It is our intention to vigorously protect and enforce SCO’s intellectual property, System V source code and our copyrights. We’re now fully prepared to do that.”

And they did. SCO subsequently filed suit against IBM (IBM), auto giant DaimlerChrysler and a coterie of other companies, each time sounding the same theme: Our copyrighted UNIX code was illegally cobbled into Linux. You’re using it without a license. Pay up.

But SCO never specified exactly the Linux code it believes infringes on its copyrights, even in the face of repeated calls to do so from its defendants and the open source community. Indeed, it could be said that the company’s legal campaign against Linux was defined by its utter failure to prove that the open-source operating system contains any of its intellectual property. Certainly, that was the opinion of the U.S. District Court for the District of Utah, which found that the copyright to UNIX and UnixWare was owned by Novell. That decision drove SCO into bankruptcy and ended its high-profile legal attack on Linux.

But only for a time. Because a federal appeals court on Monday ruled that SCO is entitled to a jury trial on its claims to Unix, a ruling that might lead to a renewal of the company’s campaign against Linux. “We take no position on which party ultimately owns the Unix copyrights or which copyrights were required for Santa Cruz to exercise its rights under the agreement,” the court wrote in its ruling. “Such matters are for the finder of fact on remand.”

And so, astonishingly, this six-year battle is headed back to court once again, a development Darl McBride was quick to spin as a vindication in one of his typically pontifical pronouncements. “Today is not the end of the war but it certainly is a key battle that we’ve won,” he said of the decision. “Now it’s time to move on to the next series of battles with our victory in hand.”

Of course, for events to play out that way, SCO must prove that Unix contains its intellectual property, something it has so far failed abysmally to do. Indeed, the judge presiding over the original case compared SCO’s claims to those of a store owner accusing someone of shoplifting but refusing to say what items had been stolen. As Linux creator Linus Torvalds once said, “There really is a reason why nobody believes a word SCO is saying, and it’s because SCO is lying.”

But in the end, the maker of the BlackBerry line of smart phones ended up licensing them anyway.

This morning, RIM said it will pay Visto $267.5 million to resolve the long-running patent dispute and purchase a license for the intellectual property at issue. The deal, expected to close next week, will end all lawsuits still in court, resolving an issue that, had it turned truly ugly, could have shut down RIM’s BlackBerry email service.

Oracle revenue was down five percent from a year ago to $6.9 billion, but this was well above the Street consensus of $6.47 billion. And new license revenue, a key measure of software growth, dropped 13 percent, pretty much what Oracle (ORCL) had predicted back in March. So, a solid performance in a difficult economic climate. Said Oracle CFO Jeff Epstein, “We executed substantially better than we expected on both the top and bottom line for the quarter.”

Oracle shares were up more than 1.5 percent in after-hours trading on the news.

But it’s getting closer.

Interfax reports that Apple (AAPL) is near to obtaining the Network Access License from the Ministry of Industry and Information Technology that would allow the iPhone to be sold in the country. Once the license is secured, Apple needs only to finalize a distribution deal with China Unicom to make good on Cook’s promise, though that has proven problematic.

Apple’s discussions with China Unicom have reportedly been troubled by the company’s distaste for the idea of China Unicom preinstalling non-Apple software–a media player other than iTunes, for example–on its iconic handset. That said, Apple is apparently confident enough in a positive outcome that it’s begun staffing up for a launch. Last week the company posted an ad to its recruitment Web site looking for someone to oversee “iPhone training” across Asia. The position, which will be based out of Beijing, is responsible for designing training programs for iPhone sales teams and retail channels partners.

Sources briefed on the matter say DOJ attorneys have contacted Google (GOOG) as well as the Association of American Publishers and the Authors Guild about the antitrust implications of the agreement. Presumably at issue here are concerns over the settlement’s opt-out terms–authors and publishers who don’t opt out have effectively opted in–and the fate of orphan works, books still in copyright but whose copyright owners are unknown.

Orphan works number in the millions and the fear is that this settlement gives Google a powerful blanket license for them. As Pamela Samuelson, director of the Berkeley Center for Law & Technology, recently noted:

An estimated 70 per cent of the books in the Book Search repository are in-copyright, but out of print. Most of them are, for all practical purposes, “orphan works,” that is, works for which it is virtually impossible to locate the appropriate rights holders to ask for permission to digitize them….The proposed settlement agreement would give Google a monopoly on the largest digital library of books in the world….Google will also be the only service lawfully able to sell orphan books and monetize them through subscriptions….Virtually the only way that Amazon.com, Microsoft, Yahoo!, or the Open Content Alliance could get a comparably broad license as the settlement would give Google would be by starting its own project to scan books. The scanner might then be sued for copyright infringement, as Google was. It would be very costly and very risky to litigate a fair use claim to final judgment given how high copyright damages can be (up to $150,000 per infringed work). Chances are also slim that the plaintiffs in such a lawsuit would be willing or able to settle on equivalent or even similar terms.

Samuelson concludes that the Book Search agreement as written is essentially a major restructuring of the book industry and an anticompetitive one at that. If that is indeed the case–and Google maintains that it is not–it’s worrisome indeed. Certainly, it’s reason enough for the DOJ to give the agreement a good once-over.

Sadly for Otellini, that’s not likely to be the case. Sources close to the company tell Bloomberg that IBM is knee-deep in talks to acquire Sun and that a deal may be announced as soon as next week.

In its second quarter, Oracle managed to hit Wall Street’s earnings targets despite the souring economy. Will it manage to do so again in its third?

That’s not clear. But by some accounts, the company’s third quarter is shaping up to be an ugly one–the company’s worst since the early ’90s. Said JMP Securities analyst Patrick Walravens, “Our due diligence suggests that the February quarter was, in some respects, the worst Oracle has experienced in over 15 years. The tone of the commentary from our industry sources regarding new license revenue is the worst we have ever heard.” And with that, Walravens cut his earnings estimate for Oracle’s fiscal year to $1.37 a share from $1.41 a share.

So companies aren’t clamoring to buy new database software in the worst economic crisis in 50 years. That’s not exactly a surprise. Nor is it surprising that Oracle’s business would suffer for it. That said, it may not be suffering as badly as Walravens claims. Certainly, there are other analysts who don’t quite share his grim view of the company’s prospects. Said Cowen Group analyst Peter Goldmacher, “Oracle is better positioned than its technology peers to weather the downturn given its broad technology solutions and its ability to manage margins.”

Of course, there’s a danger in that: code forking. With so many developers working on Android’s code–all with unique views of what it is and what it should do–there’s a possibility that the platform could fragment into multiple versions spread across innumerable vertical devices. A confusing prospect for consumers. Google aims to combat this with a nonfragmentation agreement that asks developers not to “modify [the Android code] in noncompatible ways.” While that should prevent some developers from forking Android’s code, it surely won’t prevent all of them.

[Image Credit: Rich Dellinger]

Sure is. Especially for an operating system that’s met with such a middling reception. That said, you’ve got to wonder if the 140 million copies to which Gates refers are deployed copies or licenses sold. Because if it’s the latter, the number would be decidedly less impressive. It wouldn’t really account for volume licenses sold to corporate customers, copies pre-installed on OEM computers, and copies downgraded to Windows XP. And Gates has made exactly this type of oblique statement before, the last time Microsoft announced Vista sales figures.