Virtualization's Dirty Laundry Aired in German Court Room By David Marshall published: Tuesday, May 29 2007
Netsys has sued Parallels' German distributor for copyright violation claiming Parallels' virtualization products are directly based on a line of products that Parallels developed on paid commission for Netsys, of which it says, Netsys has been assigned all copyrights.
What reads like a novel of corporate intrigue and suspense, court documents of the lawsuit between financier Netsys and the accused, Avanquest, attempt to answer lingering questions in the virtualization community – what happened to the desktop virtualization platforms twoOStwo and SVISTA? These two products came and went, never really making it to market, although both products had the potential to give VMware and Connectix (acquired by Microsoft) a run for their money in the desktop virtualization market. To try and answer that question, we rely on the court documents to give us a brief history and timeline, and then try to corroborate that with information found on the Internet.
WHAT IS THE LAWSUIT ABOUT
Netsys has sued Parallels' desktop virtualization distributor in Germany, Avanquest, for copyright violations claiming that Parallels’ products are directly based on a line of products that Parallels developed on paid commission for Netsys, of which it says Netsys has been assigned all copyrights. The argument that the claimant makes is that all of the evidence suggests that Parallels has taken the product they had developed on paid commission for Netsys, enhanced it further and then ultimately began distributing it on their own.
Netsys' initial goal with the lawsuit is to stop the sale and distribution of Parallels’ virtualization software products in Germany.
The first lawsuit, where Netsys requested a temporary injunction from the Landgericht (district court) of Berlin, failed. They were trying to keep Avanquest from selling any more copies of the Parallels virtualization products. (Avanquest isn’t a normal reseller; it acts more like a vendor selling localized versions of Parallels in its own branded boxes across Europe). I say the lawsuit failed, but what it did do was confirm that Avanquest could be sued in a German court according to German law. The court seemed to follow on every aspect of the complaint, but did not conclude that today’s Parallels products are at least in part based on twoOStwo, and thus violating Netsys’ copyrights. However, as this was an “urgency proceeding,” there was no way to hear “arbitrary witnesses” and experts. As such, the court did not consider all the evidence that Netsys otherwise would have presented in support of its claim of copyright violation.
Netsys has again sued Avanquest, but this time requested a full trial, in which "arbitrary witnesses" and experts can be called and heard by the court. And as with the first trial, it seems as though Parallels has once again entered into the proceedings as a "trial party member."
The only thing left, according to Netsys, is the presenting of the full evidence for the copyright violation. However, if Netsys wins this trial, the court will only order Avanquest to stop selling Parallels in Germany. If that were to happen, it seems like it would be up to Netsys to decide whether or not they take things any further.
THE PRODUCT TIMELINE
According to Netsys, the company recognized the potential of the market for virtualization quite early on. From 2000 to 2003, they claimed to have financed the development of the product known as “twoOStwo” on behalf of one of its customers, a German bank in need of support for their OS/2 implementations. At that time, Netsys contracted a company called Parallels Ltd, based in Russia, to develop the virtualization software.
The lawsuit claims that the first contract with Parallels was for a three month period, and that five more contracts followed. And according to court documents, the company paid € 209,800 for the programming jobs.
Evidently, this was the beginning of a sticky situation. According to the lawsuit, the two companies began to disagree as to the progress being made on the project. As this split occurred, the lawsuit claims that Parallels began to offer the virtualization software illegally to several companies in Germany and the USA, even though all of the copyrights were claimed by Netsys.
Initially, Parallels development of the virtualization platform continued, this time funded by an American company called “Serenity Systems International” according to the lawsuit. And instead of being called twoOStwo, the claim made is that the product was being called SVISTA. Before the product could reach the market, as before with Netsys, the agreement between Parallels and Serenity Systems International was supposedly cancelled.
According to what I could find on the Internet, Parallels Ltd stopped selling twoOStwo on their Web site around May of 2004, and instead began offering something called Virtual Machine for Windows version 2.20 and they began development of Virtual Machine for Linux/FreeBSD.
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Figure 01 - Parallels Selling Virtual machine for Windows (per a website archive)
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According to an archive website, around July of 2005, the content on the Parallels Ltd Web site (http://www.parallels.ru) changed, and the new Web page content simply displayed a contact list of email addresses for marketing, partners, sales and contact. The email addresses now had a @parallelssoft.com address.
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Figure 02 – Parallels Web page changed to only show contact email addresses (per a website archive)
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The archive suggests that the Web site was then updated again sometime around November of 2005, where it resurfaced as Parallels, Inc. offering its desktop virtualization product, Parallels Workstation 2.0 in Beta. It also changed the contact email addresses to @parallels.com.
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Figure 03 – Parallels offering Parallels Workstation 2.0 Beta (per a website archive)
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Fast forward to today and Parallels, Inc. offers its Parallels Workstation 2.2 for Windows and Linux and its newest product, Parallels Desktop for Mac. And the http://www.parallels.ru Web site now redirects to http://www.parallels.com.
In November of 2005, Virtual Strategy Magazine spoke with Parallels, Inc. about the launch of their new desktop virtualization software.
http://www.virtual-strategy.com/article/view/1334/1/20
VSM spoke with Ben Rudolph, Marketing Manager, about the startup and its vision.
VSM: Parallels is a new company. Can you tell us how it got started?
BR: Parallels is a new organization, but the core team has been working together since 1995, and entirely focused on virtualization since 1999.
In 2000 the team was commissioned by a large European stock registrar to develop a mainframe virtualization project. In 2001 the company was formally incorporated, and in 2005 we emerged from with the opening of our new DC area headquarters.
This interview indicates that the Parallels, Inc. developers had been “working together” since 1995 and “entirely focused on virtualization” since1999.
The lawsuit claims that each of these subsequent versions is a further development of the virtualization software that had originally been funded by Netsys, which also states that they own the copyrights.
The lawsuit states the following versions are available among others (quoting directly from the court documents):
1. At the end of 2003, twoOStwoVersion 2.20 Build 38 was handed to the claimant by the Russian programmers, who were working for Parallels at that time. This was the last version given to the claimant by Parallels in accordance to the contract.
2. At the beginning of 2004 “twoOStwo Version 2.30 beta 1 (Build 42)” was released by Parallels. Since the dispute between the claimant and Parallels was already intensified at that time, the Russians refused to hand over this version to the claimant. Instead, they offered a download of this version on their own website, www.parallels.ru.
3. After the refusal of Parallels to provide further versions to the claimant, Parallels obviously found a new partner in the American company “Serenity Systems International”. During the year 2004, the product “twoOStwo” suddenly appeared in a nearly identical version on the Internet under the name of “Serenity VISTA” and was also advertised by Serenity.
4. “SVISTA” has also never reached a point on which it was ready for the market. In October 2005, the product appeared again in a modified version named “Parallels Workstation”, now sold on the account of and by Parallels. The first version available to the public was “Parallels Workstation for Windows 2.0 (Build 1442)”. “Parallels Workstation for Windows 2.1 (Build 1670)” was released after some intermediate versions in March 2006.
5. The first version of the software for Intel-Macintosh was obviously released under the name of “Parallels Desktop for Mac” in August 2006. In spite of the different names, the insurance-numbers were continuously in use. “Version 2.2 Build 1970” was released in November 2006.
NETSYS TO OFFER ITS EVIDENCE
In the second lawsuit, Netsys has the burden of trying to prove copyright violation. The claimant has the task of showing to the satisfaction of the court that the current software is still run by the same code of programming that it had originally financed. To do that, Netsys plans on comparing the different versions in detail.
To try and prove this, Netsys offered the court the following information according to court records:
The lawsuit claims the current version of "Parallels Desktop for Macintosh" is compatible with the former version of "twoOStwo". They claim this shows the current product is run by basically the same functional core of the software which was developed for and financed by the claimant, and it concludes that the binary compatibility of the file-formats must be led back to the basically identical code of programming. It offers the following:
1. The current version of “Parallels Desktop for Macintosh” can read, without any difficulties, hard drive-containers that were produced with the old version of “twoOStwo”.
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The current software “Parallels Desktop for Macintosh” does still understand container-files that have been produced with the old software “twoOStwo”. This is not only the case on the same host-platform (for example under Windows) but also, for instance, a container that was produced with twoOStwo under Windows runs with Parallels on the Macintosh!
2. If the so called “OS/2 Tools”, which belonged to “twoOStwo”, are installed in a virtual machine that contains the guest-operating system “IBM OS/2 Warp”, even the cursor-integration is working properly - in case the hard drive container runs under “Parallels Desktop for Macintosh”.
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Such a mouse-driver was part of the “OS/2 Tools” which were programmed by Parallels on explicit behalf of the claimant. If those old “OS/2 Tools” are installed into the OS/2 guest (which has just been described as an example above), they, together with all other files (including the mouse-driver), will be transferred to the virtual hard drive – the large file that has just been described as well. If the container is copied onto a Macintosh, not only Parallels Desktop for Macintosh will be able to read and write the container (as described before). Astoundingly, the old mouse-driver of twoOStwo is also continuously working together with Parallels Desktop for Macintosh!
The claimant says this is technically impossible that these correspondences appear accidentally. They can only happen under the following circumstances:
1. The binary format of the old hard drive container, just as the cursor integration, must have been programmed again and all new by Parallels, namely, based on identical interfaces and specifications. Since the required specifications of twoOStwo have never been revealed, this could only have been achieved along with an enormous personal and financial effort.
2. The program is still running based on the same code.
Netsys believes number two is the explanation. They claim that it is impossible that two programs understand the data format of one another by accident, and they offer as an example that all current virtualization platforms from Microsoft, VMware, VirtualBox and QEMU have incompatible formats.
Netsys also claims that the present company ‘Parallels, Inc.’ is run by mostly the same staff that worked for the former company Parallels and programmed twoOStwo on their behalf. They also claim that the same programmers that wrote twoOStwo worked on the Parallels software. And thus, the code was readily available.
As further evidence, the claimant offers that Parallels Desktop actually supports IBM OS/2 as a guest operating system. The claim is that OS/2 is a highly complex operating system that requires a much bigger effort to be operated in an environment of virtualization. Up to the present day, VMware as the biggest competitor has not been able to operate OS/2. And if it were technically possible to do, they claim there is no economical reason to support OS/2 as a guest operating system any longer.
As further proof, the records say that Netsys is prepared to offer a complete specialist report into evidence to “show that the binary compatibility of the hard drive containers cannot be accidental but must rather be based on an identical code of programming.” The claimant suggests Mr. Joachim Hasenmuller, the managing director of InnoTek, as that specialist.
Many of us are familiar with InnoTek which recently popped up on the virtualization radar screen as they introduced their own virtualization platform called VirtualBox.
Netsys also offers into evidence, the following information along with product screenshots as necessary. (These are taken from the screenshots that Netsys offered as its evidence to the court.)
During the installation of the twoOStwo product, a “ReadMe” file shows copyright information at the end of the text:
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Figure 04 – twoOStwo README file showing copyright (Screenshot supplied by Netsys)
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It reads:
Copyright © 2000-2003 NetSys GmbH, Dresden, Germany, All rights reserved.
Web site http://www.netsys.info
E-mail
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
Developed by Parallels Ltd., Moscow, Russia.
Web sites http://www.parallels.ru, http://www.twoostwo.com
E-mail
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
And Netsys claims that once you boot the program after the installation, the NetSys logo is shown along with copyright information.
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Figure 05 – twoOStwo splash screen showing copyright (Screenshot supplied by Netsys)
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Netsys claims the about dialog provides similar information.
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Figure 06 – twoOStwo About screen showing copyright ownership (Screenshot supplied by Netsys)
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As further evidence in the copyright claims, the claimant offers the following information and screenshots to show, as it claims, “the almost unmodified product reappeared under the name ‘Serenity SVISTA’ in the course of the year 2004, now evidently on behalf of the American company, Serenity Systems International.”
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Figure 07 – twoOStwo and SVISTA About screen comparison (Screenshot supplied by Netsys)
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Figure 08 – twoOStwo and SVISTA Configuration screen comparison (Screenshot supplied by Netsys)
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The lawsuit claims that in October 2005, the product reappeared once more in modified form, now under the name ‘Parallels Workstation’. It claims that maintenance work on the user interface was performed, but that it is “still visible at some points of the user interface that yet the code that was financed by the claimant has worked beneath the polished user interface.” It offers into evidence the following screenshot, which attempts to show the same ‘additional information’ in the bottom quarter as the preliminary version SVISTA, namely ‘Smart kernel acceleration’, ‘Remote client session’ and especially ‘Citrix support active’. (Compare Figure 7 and Figure 9)
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Figure 09 – Parallels Workstation 2.0 About screen – Notice 'Additional information' (Screenshot supplied by Netsys)
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Particularly, they claim Citrix support is noteworthy because it is a special technical function that Parallels programmed in behalf of the claimant as the claimant itself was on its part assigned with this function by the then Westfälischen Provinzial Versicherung.
With ‘Citrix’, the support for ‘Citrix Metaframe’ is meant, an effective application of the company Citrix, with which the soft copy of graphical user interfaces can be indicated on a remote computer via a network and with which the program can be used via this computer. Thus, a program can be run on a different computer to the one on which it really runs. This function is mainly interesting to large companies and financial institutions (exactly such as the Westfälische Provinzial).
They also offer screenshots as a comparison of the ‘devices menu’ between twoOStwo and Parallels Workstation, claiming that it is still largely the same – even if modified.
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Figure 10 – twoOStwo Devices menu comparison (Screenshot supplied by Netsys)
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Figure 11 - Parallels Workstation Devices menu comparison (Screenshot supplied by Netsys)
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And finally, the claimant provides a list of program files which have similar names, file size and function. According to Netsys, in the late versions of twoOStwo, an enhancement was added which enables Desktop Virtualization together with a Citrix environment (IOHooks.dll, IOHooksCitrixClient.dll, IOHooksCitrixServer.dll). These complex DLLs presumably took months of work and are named identically and sized the same. The ImageTool is also named the same and according to the lawsuit, “was originally produced by Parallels under the explicit contract of the claimant to pack and to defrag files for the virtual hard drive”.
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Figure 12 – twoOStwo and Parallels Workstation file comparison (Information provided by Netsys)
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WHERE DOES THAT LEAVE THINGS?
So while this legal action may have shed some light upon the mystery behind twoOStwo and Serenity SVISTA, things are still unknown. What is clear from this lawsuit is that NetSys claims to own the copyright and all rights to the original code behind twoOStwo. And it is now attempting to stop the sale and distribution of Parallels software being sold under the label of Avanquest in Germany. If NetSys wins their lawsuit in Germany, the question remains as to what would happen next.
Almost all of the information contained in this article came from various court documents that had been acquired. We also emailed a spokesperson from Parallels as well as the company’s PR firm to find out any more information or details on the case that they could provide. But since these requests were to answer questions pertaining to what seems like an ongoing lawsuit, we really shouldn’t have expected that the company could answer any questions that we might have had. After all, what attorney would allow that? A Parallels, Inc. official did say, however, that they strongly believe that there is no merit to the claim, and they will vigorously defend themselves against it.
Stay tuned.
"David Marshall has been working in the virtualization industry
since 1999 and during that time has helped to get four virtualization start-up
companies off the ground. He also runs the InfoWorld Virtualization Report, as
well as the virtualization news blog, VMBlog.com. David is also a co-author of the
book "Advanced Server Virtualization: VMware and Microsoft Platforms in
the Virtual Data Center",
a book that details years of hands on experience using and implementing server
virtualization solutions. And his latest book, "VMware ESX Essentials in
the Virtual Data Center"
is now available for pre-purchase."
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