It seems that Microsoft think that free and open source software violates 235 of their patents and they are going to demand royalties. Though Steve Ballmer, when asked if he was going to sue anyone who refused to pay up said "That's not a bridge we've crossed and not a bridge I want to cross today on the phone with you."
Essentially Microsoft's lawyers, who are a pretty smart bunch, have spotted a loophole in the GPL and OS licences that enables them to pursue a corporate strategy to sign royalties deals with big linux distributors like Novell. Eben Moglen of FOSS has now tweaked the GPL to close the loophole and suggested that Microsoft could potentially become subject to the GPL; and that a big legal battle on this front could be the Waterloo for software patents. One to watch.
Update: Pamela Jones is unconcerned.