Dedicated hosting provider to pay SCO for Unix IP license

The seven-figure deal will cover the hosting company's 18,000 Linux servers

A Houston-based dedicated-server hosting company has signed an intellectual property (IP) licensing agreement with The SCO Group Inc. to shelter the hosting provider's customers from any future Unix or Linux IP claims.

Under the deal announced today, is paying to license SCO's Unix binary code for all of the approximately 18,000 servers that run Red Hat Linux. Since last March, when Lindon, Utah-based SCO filed a lawsuit now worth $5 billion against IBM, SCO has maintained that all corporate users of Linux owe it licensing fees because some of its proprietary System V Unix code has illegally made its way into Linux.

The agreement, which sources said was a seven-figure deal, will cover a site license for's use of its Linux servers.

SCO has been selling IP licensing agreements since September as a way of allowing Linux users to protect themselves from legal action, but most companies have adopted a wait-and-see approach, since the IBM case isn't scheduled to go to court until April 2005.

"With SCO having these IP issues with Linux, we wanted to be sure our customers would not be affected," said Isabel Wang, a spokeswoman for, a division of Everyones Internet.

The company leases dedicated servers to customers, many of whom use them to host corporate Web sites, run online communities, operate gaming networks or support corporate intranets, she said. The servers are hosted in the company's data center in Houston. "We feel it is our responsibility as their hosting provider to give them a place that they can grow without interruption and without worries" about IP issues.

Wang acknowledged that the company is paying for the licenses even though SCO hasn't yet proved its case in any court.

"Our goal is to preempt ourselves and our customer base from any future liability," Wang said. "We just made a calculated decision that this would be a good thing. We want to eliminate one more worry" for customers.

If SCO should lose its case, customers will be safe anyway, Wang said. "But if they [win], we don't want to be one of the ones tangled up in this," she added.

EV1Servers.Net, established in January 2000, also runs about 2,000 dedicated servers using Windows.

Robert Marsh, CEO of Everyones Internet, said in a statement that the deal with SCO "eliminates uncertainty from our clients' hosting infrastructure. Our current and future users now enjoy the peace of mind of knowing that their Web sites and data are hosted on a SCO IP-compliant platform."

George Weiss, an analyst at Gartner Inc. in Stamford, Conn., said some corporate Linux users will respond to SCO's posturing and sign similar licensing deals. "There's too much at stake in a worst-case scenario," Weiss said. But for other users, the decision will remain a matter of assessing their risk and looking at the ongoing case as it unfolds.

Weiss said that is taking a monetary risk by paying for a license before the case is decided. "I'm not sure why or how they came to that conclusion now," he said.


Copyright © 2004 IDG Communications, Inc.

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