SCO takes Linux battle to users

The SCO Group has stepped up its campaign to protect its intellectual property rights by making good on a promise to take aim at end users, but despite the flurry of legal activity last week customers and industry observers remain steadfast in their support of Linux.

The SCO Group has stepped up its campaign to protect its intellectual property rights by making good on a promise to take aim at end users, but despite the flurry of legal activity last week customers and industry observers remain steadfast in their support of Linux.

“We, along with the rest of the Linux community, have been waiting for this,” says Joe Poole, technical director at Boscov’s Department Stores in Reading, Pa., which runs SuSe Linux. “It really has become a non-issue because nothing has been proven.”

On Wednesday, the same day SCO announced a $2.2 million loss on revenue of $11.4 million, the company said that it had filed a pair of lawsuits: one regarding copyright violations in Linux against AutoZone, and the other claiming breach of contract in a Unix software agreement with DaimlerChrysler.

The first lawsuit, filed in U.S. District Court in Nevada against AutoZone of Memphis, Tenn., centers on SCO’s claim that Unix code – which the company says it owns – has illegally been ported into Linux. In the suit, SCO says AutoZone is “running versions of the Linux operating system that contain code, structure, sequence and/or organization from SCO’s proprietary Unix System V code in violation of SCO’s copyrights.”

The second lawsuit, filed in the Oakland County Circuit Court in Michigan, says DaimlerChrysler failed to meet the terms of a Unix software agreement it holds with SCO. The lawsuit is based primarily on SCO’s claims the Auburn Hills, Mich., automaker “refused to provide the certification of compliance with the ‘provisions'” of the software agreement.

A DaimlerChrysler spokeswoman said the company has not yet been served with the lawsuit and could not comment. AutoZone declined to comment.

SCO’s plan of attack is obvious, observers say: Put pressure on Big Blue. According to the IBM Web site, DaimlerChrysler runs IBM pSeries servers. It also runs a Linux cluster on IBM workstations. AutoZone is an IBM customer as well.

“This is all part of SCO’s continuing strategy to put pressure on IBM,” says Jeffrey Neuburger, an intellectual property attorney at Brown Raysman Millstein Felder & Steiner. “One effective way of putting pressure on a company is by suing its customers in an intellectual property issue.”

Meanwhile, three companies, including Computer Associates, last week confirmed they had each purchased an Intellectual Property License for Linux. SCO first made the licenses available last summer for $699 per server as a way of letting companies running Linux protect themselves against possible litigation.

Computer Associates, a staunch supporter of Linux and a founding member of the Open Source Development Labs, says it purchased the license as part of a $40 million settlement reached in August in a breach of contract dispute with technology incubator Canopy Group and one of its offshoots, Center 7. Canopy Group is a major investor in SCO.

“CA disagrees with SCO’s tactics, which are intended to intimidate and threaten customers,” says Sam Greenblatt, senior vice president and chief architect of the Linux Technology Group at CA. “CA’s license for Linux technology is part of a larger settlement with Canopy Group. It has nothing to do with SCO’s strategy of intimidation.”

SCO CEO Darl McBride is hoping that filing end-user lawsuits will persuade more Linux users to purchase SCO’s intellectual property licenses. He likened his company’s legal efforts to those of the recording industry as it sought to end the illegal download of copyrighted music.

“We anticipate that there are many end users that have not considered the ramifications of the unlicensed use of SCO copyrighted technology and that an increasing number of companies will now take the appropriate action to license SCO’s intellectual property,” he said during a conference call last week.

Analysts and attorneys doubt that will be the case. For one thing, they say in the music industry case it was clear who owned the copyrighted material. Things aren’t so clear with SCO. SCO is in litigation with Novell over who actually owns the copyrights to Unix. The initial Unix intellectual property rights case, which was filed against IBM a year ago, is progressing. IBM last week was ordered to show SCO specific Unix code that might be in question. SCO, in turn, was ordered to point out exactly which code in Linux might have come from Unix.

“There’s nothing in copyright law that requires me to pay for a license just because someone says he has a copyright while at the very same moment he’s suing somebody else who says he doesn’t,” says Eben Moglen, professor of law at Columbia University and general counsel of the Free Software Foundation. “So I have to say despite all this rumbling from SCO . . . things are pretty much where they were before. SCO against Novell means nobody actually is sure that SCO owns anything.”

Meanwhile, SCO’s legal fees are mounting: it reported costs of $3.4 million in the first quarter alone associated with protecting its intellectual property. At the same time, it reported collecting just $20,000 in revenue from licensing efforts during the quarter.

“They’re just widening the number of people they are engaged in litigation with, and it does not prove their points,” says Dan Kusnetzky, vice president of system software at IDC. “What it does is take their limited amount of revenue and direct it toward litigation rather than creating and maintaining products. . . . If you look at the escalating costs and decreasing revenue, there has to be a point where the revenue does not support the escalating costs of litigation, and when that day comes they will no longer be able to continue either litigating or being in business.”