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SCO wants licensing fees from corporate Linux users

Otherwise, SCO said, companies could be in legal hot water

By Todd R. Weiss
July 21, 2003 12:00 PM ET

Computerworld - The gloves are now officially off -- all enterprise Linux users have to pay The SCO Group Inc. new licensing fees to use Linux, or they could find themselves on the wrong end of a copyright infringement lawsuit.
That was the ultimatum laid out today by SCO CEO and President Darl McBride, who said that the $3 billion lawsuit against IBM in March was apparently just the start of his company's march to defend itself from what it sees as rampant theft of its Unix System V intellectual property (IP).
"We agree on the point that this case started out as a contracts case against IBM. As of today, it's a different game," McBride said today in a conference call with reporters and analysts.
"SCO's Unix IP has been misappropriated into Linux," he said. "SCO is giving customers [of any Linux distribution] the opportunity to run Linux legally."
Back in May, SCO warned all commercial Linux users that they could be using its code illegally and recommended that they seek legal advice to help decide what to do about the issue (see story). Last month, McBride said, some corporate Linux users contacted SCO and said they wanted to find a "way to work it out" so they could continue to use Linux.
"We think this allows both parties' concerns to be met," McBride said.
Lindon, Utah-based SCO also announced today that it has now received copyrights for its System V code (see story). The company had never before officially filed for the copyrights, which it needed to do as a procedural step while it pursues its legal case against IBM, McBride said. In that case, SCO alleges that IBM misappropriated trade secrets related to SCO's Unix products to benefit IBM's Linux strategy.
The specially tailored SCO UnixWare 7.1.3 licenses will support runtime, binary use of Linux for all commercial users of Linux based on kernel Version 2.4.x and later, according to the company. Buying a license would allow users to comply with SCO's copyrights, the company said, adding that if enterprise Linux users do so, SCO won't pursue legal challenges against them related to the code. Pricing hasn't yet been announced but will be comparable to existing UnixWare licenses, McBride said.
"Today's announcement is really a new front that we're opening up" with existing enterprise Linux customers, McBride said. "It gets you clean, it gets you square with Linux without having to go into the courtroom."
Also involved in today's call with McBride was SCO's lead attorney, David Boies, who served as special trial counsel for the U.S. Department of Justice in its antitrust suit against Microsoft Corp.
Boies said the new licensing offer to existing Linux corporate users comes even though the SCO/IBM case hasn't been decided in any court.
"It is not necessary to resolve the IBM case" to deal with other issues, Boies said. While the case works its way through the court system, Linux corporate users don't have the right to take advantage of SCO's IP in Linux, he said, adding, "If the conduct is improper, the conduct is improper."
Analyst Gordon Haff at Illuminata Inc. in Nashua, N.H., said he sees SCO "going after users because if they go after [Linux vendors such as] Red Hat Inc., those guys are going to have to fight them" to defend their businesses. "They can't roll over" and pay the demands like corporate users could, he said.
"The end users aren't going to be so principled here," Haff said.
George Weiss, an analyst at Gartner Inc. in Stamford, Conn., said that if SCO is successful in squeezing licensing fees out of users, it would essentially create a new tax on Linux, perhaps upsetting the often-favorable total cost of ownership arguments for using it.
"SCO is really applying pressure. It's gotten very nervous" among users, he said. "They don't know what to do."
One part of SCO's argument, though, is that much of the alleged code infringement is related to the latest symmetric multiprocessor (SMP) capabilities in Linux kernel 2.4 and later, Weiss said. If that's the case, then SCO's claims may not affect most enterprise users, who are using Linux more for infrastructure services than SMP.
"SMP is where the impact could be more in the future. [The SCO threats] could slow the advance of Linux" for higher power uses for now, he said. "It could put on hold a lot of planned purchases."




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