In comments confirming many of the open-source community's suspicions, Microsoft CEO Steve Ballmer has claimed that the Linux OS (operating system) infringes on his firm's intellectual property.

In a question-and-answer session after his keynote speech at the Pass (Professional Association for SQL Server) conference in Seattle, Ballmer said Microsoft was motivated to sign a deal with Suse Linux distributor Novell earlier this month because Linux "uses our intellectual property" and Microsoft wanted to "get the appropriate economic return for our shareholders from our innovation".

The 2 November deal involves an agreement by Novell and Microsoft to boost the interoperability of their competing software products. It also calls for Microsoft to pay Novell $440m (about £230m) for coupons entitling users to a year's worth of maintenance and support on Suse Linux to its customers. In addition, Microsoft agreed to recommend Suse software for Windows users looking to use Linux as well.

A key element of the agreement now appears to be Novell's $40m (about £21m) payment to Microsoft in exchange for the latter company's pledge not to sue Suse Linux users over possible patent violations. Also protected are individuals and non-commercial open-source developers who create code and contribute to the Suse Linux distribution, as well as developers who are paid to create code that goes into the distribution.

Many open-source advocates criticised the deal, nevertheless. They argued that it was tantamount to an admission of patent violations by a key Linux supporter that bolstered Microsoft's case if it decided to press its patent claims.

At the time, Microsoft officials, including Ballmer, were keeping mum on whether the Linux kernel, which is governed by the General Public Licence and takes contributions from programmers all around the world, violated Microsoft's patents.

Ballmer was more open at the Pass conference.

"Novell pays us some money for the right to tell customers that anybody who uses Suse Linux is appropriately covered," Ballmer said. This is important to the firm, he said, because otherwise "every Linux customer basically has an undisclosed balance-sheet liability".

Pamela Jones, editor of the blog, which tracks legal issues in the open-source community, said: "My reaction is that so far, what Ballmer said is just more FUD [fear, uncertainty and doubt]. Let him sue if he thinks he has a valid claim, and we'll see how well his customers like it."

Officials at Red Hat, the leading Linux distributor, also dismissed Ballmer's comments. "We do not believe there is a need or basis for the type of relationship defined in the Microsoft/Novell announcement," said Mark Webbink, deputy general counsel for the company.

Red Hat has called Microsoft's legal threat a looming "innovation tax". It also said it can protect its customers against patent claims.

Jones noted that after the 2 November deal was announced, Novell said on its website that the agreement had nothing to do with any known infringement. "So which is true?" she pondered.

Jones also challenged Ballmer to "put his money where his mouth is" and detail exactly what part of the Linux kernel source code allegedly infringes upon Microsoft patents, so that "folks will strip out the code and work around it or prove his patent invalid".

Ballmer did not provide details during his comments yesterday. But he was adamant that Linux users, apart from those using Suse, are taking advantage of Microsoft innovation, and that someone – either Linux vendors or users – would eventually have to pay up.

"Only customers that use Suse have paid properly for intellectual property from Microsoft," he said. "We are willing to do a deal with Red Hat and other Linux distributors." The deal with Suse Linux "is not exclusive", Ballmer added.

Robert McMillan contributed to this report.