Microsoft threatens to sue all Linux users.. then changes it mind?

Yesterday, it was reported on The Register that Microsoft's top man, Steve Blamer said Linux "uses our intellectual property". At no point do Microsoft elaborate on what intellectual property has been stolen.

Today however, it appears that Microsoft have backtracked slightly, and are now still claiming they are right but are essentially saying they're not going to do anything about it. I smell something and it isn't sheep.