WIRED:Say what you like about Microsoft, but it's not a company known for its mercy. Yet, last week, it appeared both to reveal a terrible, fatal flaw in one of its supposed competitors and then a distinct reticence to kill it off.

The competitor was, as so often is the case these days, Linux and the world of open source: the free to distribute, volunteer-created software that the internet has done so much to enable. Microsoft's threat was quite specific. Open-source programs, it said, infringed Microsoft's intellectual property: in particular, its extensive patent portfolio.

Microsoft says that the Linux kernel (the core of the operating system) violated 42 of its patents, while user interface and other design elements in the rest of common distributions of the OS infringed at least 65.

OpenOffice.org, the free competitor to Microsoft Office, infringed 45 patents, yet the company has made no concrete moves to sue the creators of open source - or the rich corporations like IBM and Sun that support it.

The Linux community describes the Microsoft statements as "fear, uncertainty and doubt", or FUD. Companies like Microsoft, it says, talk tough about patents, but never follow through with lawsuits.

The real reason, Linux fans say, is to spread rumours that discredit Linux as a rogue and lawless alternative, because in reality, the OS is a genuine threat to Microsoft's operating system monopoly.

Does Microsoft really have patents on Linux? Undoubtedly. In the US, so many obvious software and business method patents have been granted that almost every reasonably complex program treads on one.

If Linux is such a threat to Microsoft's monopoly, why doesn't it follow through and sue the open-source infringers into oblivion? A simple requirement to pay a licensing fee - the traditional end to a patent spat - would kill most open-source projects, which rely on their zero cost to distribute to provide a competitive advantage.

As Microsoft well knows, at the point it goes to court, the world gets a lot more complex. For one, it would have to reveal which patents Linux infringes.

If the free software community knew to which patents Microsoft had claim, they could quickly work to either rewrite the code to avoid the patent or challenge the patent in the courts using prior art or obviousness.

Moreover, companies like IBM and Sun have large patent portfolios of their own, which they have committed to using defensively should Microsoft go after open-source authors.

The biggest threat to Microsoft however comes from major customers using the very possibility of moving to an alternative vendor as a bargaining chip in negotiations with the software company.

Most large customers of Microsoft can cut deals with the giant and, the more viable the competition, the better those deals can be. Thus, many will enter negotiations with Microsoft with a plan to move to Linux in their back pocket.

While customers may easily wave it as a possibility to get a better deal with the Redmond company, in practice the unknown engineering problems and costs involved in migrating an established Windows shop to Linux make it uneconomical and impracticable for most.

However, in the brinkmanship of renewing a contract, it's far better for companies to at least raise it as a possibility than admit to Microsoft that they have no choice. The more fear, uncertainty and doubt Microsoft has in that quarter, the better.

It helps for Microsoft to have its own surprises too. Merely intimating that if it switched to Linux, a company would still have to pay a Microsoft tax in the form of patent licensing fees will be enough for most chief information officers to give up and return to the fold.

Linux fans may see Microsoft's words as empty and unrealistic, but it doesn't have to be a realistic threat to achieve Microsoft's aims. Linux doesn't have to be a realistic threat to Microsoft to prompt it. Linux fans may value the truth of the argument, but high-level IT sales has rarely been about the truth.