SCO Sues Two Linux Users, Warns About Further Action

DaimlerChrysler, AutoZone hit with charges; Linux user community remains defiant

Following through on threats it started making 10 months ago, The SCO Group Inc. last week filed its first lawsuits against corporate Linux users, targeting automaker DaimlerChrysler AG and auto parts retailer AutoZone Inc.

The twin lawsuits expand SCO's legal campaign against Linux backers into a new realm, and SCO executives warned that more users of the open-source operating system could face legal action if they don't license the company's Unix software or certify that they're complying with existing contracts.

But the threat may be falling on deaf ears. A sampling of Linux users, who for months have said they're not worried about SCO's allegations, since nothing has been proved in court, maintained that stance following last week's lawsuits.

"We're not at all concerned about it," said Tim Kuchlein, director of IS at New York-based Clarity Payment Solutions Inc. "Most of us here consider it a waste of everybody's time."

Kuchlein said he runs Linux servers almost exclusively. "I'm about to double our installed base as well" for Clarity's main production system, he said. "I'm buying a truckload more servers, and they're all going to be Linux as well. The SCO thing hasn't even come up as a discussion."

Corey Corrick, director of operations at Web services provider Flamenco Networks in Alpharetta, Ga., said he will continue to use Red Hat Inc.'s Advanced Server 3.0 Linux for the company's managed database and application servers despite the lawsuits last week. "We're waiting for things to shake out in court," Corrick said. "[SCO] keep[s] suing, but they haven't shown anything."

"If people would prefer to work through the court system, then we'll file a complaint and we'll work through the court system," said Darl McBride, SCO's president and CEO. "Depending on which way customers want to go, we'll accommodate their desires."

McBride, speaking during a conference call about SCO's financial results, didn't respond directly when asked if the company would refund any licensing fees if it loses the cases against DaimlerChrysler and AutoZone as well as an ongoing copyright infringement suit against IBM.

SCO sued DaimlerChrysler in a Michigan state court, charging that the automaker violated its software licensing agreement with SCO by refusing to provide a requested "certification of compliance" as part of a software audit. The suit against Memphis-based AutoZone, filed in federal court in Nevada, claims that the retailer is illegally running versions of Linux that contain Unix code copyrighted by SCO. Both suits seek unspecified damages.

A DaimlerChrysler spokeswoman declined to comment about the suit, saying that the automaker hadn't received a copy of the document. Information on IBM's Web site indicates that DaimlerChrysler has used Linux for the past two years on a 108-node IBM server cluster for vehicle crash analysis and simulation.

Ray Pohlman, a spokesman for AutoZone, said his company also had not yet seen the lawsuit and couldn't comment about SCO's copyright claims. "It is our understanding, however, that SCO has sent letters to hundreds of companies, making similar allegations," he said. Pohlman wouldn't discuss AutoZone's use of Linux.

Red Hat Inc. confirmed that AutoZone had used Red Hat Linux to run its in-store intranet until "several months ago." AutoZone has also been a SCO customer, using SCO Unix to run applications such as its point-of-sale systems.

McBride said DaimlerChrysler and AutoZone were targeted because they failed to respond to SCO's warnings that violations of its intellectual property would no longer be tolerated. In the case of DaimlerChrysler, McBride said it was "one of thousands of companies" that received written notices from SCO late last year detailing their obligations under the vendor's Unix System V source code license deals.

"Some companies responded appropriately and certified their compliance with the terms of the agreements," McBride said. "Some companies, including DaimlerChrysler, have failed to respond appropriately."

Dion Cornett, a financial analyst at Decatur Jones Equity Partners LLC in Chicago, said the charges against DaimlerChrysler and AutoZone will be difficult for SCO to prove.

For example, SCO officials discussed AutoZone's alleged use of some specific Unix file types or shared-source libraries during their conference call, Cornett said. But AutoZone says it doesn't use those files, according to Cornett. "Without knowing what building blocks AutoZone is using, the claim looks something like a fishing expedition," he said.

"I don't think they're going to get anywhere," said Bill Claybrook, an analyst at Harvard Research Group in Harvard, Mass. "They have actually struck with some good-sized customers here. But I don't think anybody's going to rush out and buy a license for [SCO's Unix technology]. It's basically another attempt to wrangle money out of people."

Copyright © 2004 IDG Communications, Inc.

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