Red Hat Inc. (NYSE:RHT - news) Chief Executive Matthew Szulik said his company last year held talks with Microsoft Corp (Nasdaq:MSFT - news) over a patent agreement that broke down before the software giant signed a deal with Red Hat rival Novell Inc (Nasdaq:NOVL - news).

The developer of Linux software, has yet to sign such a deal which could see Novell, its biggest rival, woo customers away from Red Hat and work on product development and sales with the world's No.1 software maker.

In an interview with Reuters, Szulik declined to say whether his company is now in negotiations with Microsoft over signing such a patent agreement.

"I can't answer the question," he said.

Officials with Microsoft couldn't be reached for comment.

In May of this year, Microsoft made a broad claim that open-source programs, including Linux programs from Novell and Red Hat, violate 235 of the world's largest software maker's patents.

As part of their November 2006 business partnership, Microsoft agreed not to sue Novell customers for any patent violations that might come up as a result of their use of Novell's Linux software.

Microsoft has since urged other open-source software companies to enter into similar patent agreements and signed deals with at two of them, privately held Xandros Inc. and Linspire Inc.

If Red Hat, a distributor of Linux software for business computers and the world's largest open-source software company, were to enter into a patent agreement with Microsoft it would risk losing the right to distribute key parts of the Linux operating system.

Much of the code in its flagship product, Red Hat Enterprise Linux, is distributed under the terms of a licensing agreement known as the General Public License, version 2.

An update to that license, version 3, is about to be implemented. It will forbid companies from distributing Linux software if they enter into patent agreements like the ones that Microsoft signed with Novell.

The Free Software Foundation, which authored the General Public License and owns rights to much of the code at the heart of Red Hat Enterprise Linux, inserted that clause into the agreement in an effort to discourage other open-source software developers from signing patent deals with Microsoft.

The authors of that license have said they believe that such patent deals will help Microsoft back claims that its intellectual property is being violated by code in Linux and other open source software, eventually giving the company ammunition to seek billions of dollars in license fees from users of open-source software.

Linux is the biggest rival to Microsoft Windows and also the most popular type of open-source software.