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SCO CEO Says He Will Donate His IP to Open Source if Infringement Claims Prove Untrue

SCO CEO Says He Will Donate His IP to Open Source if Infringement Claims Prove Untrue

It's Red Hat's worst nightmare.

The SCO Group, which owns Unix and is suing IBM for a billion dollars for IP infringement, has sent a letter to the CEO and to the chairman of the audit committee of all the public companies in the Fortune 1000 and the Global 500 claiming that Linux is an unauthorized derivative of Unix and that using it may involve them in a "legal liability."

The last thing Red Hat, IBM, and the rest of the Linux peddlers need right now, when Linux is at a delicate stage in its transfiguration into an enterprise operating system, is the enterprise sitting there worrying that it'll get sued if it touches the stuff.

Lest SCO appear "disingenuous," SCO said, it's going to stop selling Linux itself "until the issues surrounding Linux intellectual property and the attendant risks are better understood and properly resolved."

In SCO's case that means it's not going to sell its brand of the United Linux distribution any more, not that its Linux business has ever amounted to so much as a hill of beans even though it was a Linux pioneer. The move plays to SuSE's hand. As leader of the United Linux alliance, SuSE has been trying to distance itself from SCO since SCO sued IBM and became an industry pariah.

SCO says it will focus on its Unix and newfound SCOx web services interests instead of Linux.

There are those people already committed to Linux, with prospects of making big bucks off of it, whose lawyers claim that the SCO Group, nee Caldera, forfeited its IP claims by selling Linux itself and not objecting to its public domain-ness before now.

Those same lawyers claim that once a court or jury untangles the mare's nest of what IP SCO inherited from AT&T and what pieces of Unix Berkeley developed they'll find that SCO owns next to no IP and that most of Unix, which so many strands of the code trace their descent from, stems from the BSD line (like Linux) and has been in the public domain for 20-odd years now.

They also claim that users haven't been scared by legal liability claims since Microsoft walked away relatively unscathed from the antitrust suit.

Anyway, SCO's letter, which is posted on its Web site, is a direct attack on the unconventional open source development process sacred to Linux and responsible for much of its popularity.

In contrast to proprietary development, it says, which is designed to protect the IP rights, "much of Linux has been built from contributions by numerous unrelated and unknown software developers, each contributing a small section of code. There is no mechanism inherent in the Linux development process to assure that intellectual property rights, confidentiality or security are protected. The Linux process does not prevent inclusion of code that has been stolen outright, or developed by improper use of proprietary methods and concepts."

"Many Linux contributors were originally Unix developers who had access to Unix source code distributed by AT&T and were subject to confidentiality agreements, including confidentiality of the methods and concepts involved in software design. We have evidence that portions of Unix Sytem V software code have been copied into Linux and that additional other portions of Unix System V software code have been modified and copied into Linux, seemingly for the purpose of obfuscating their original source."

"As a consequence of Linux's unrestricted authoring process, it is not surprising that Linux distributors do not warrant the legal integrity of the Linux provided to customers. Therefore legal liability that may arise from the Linux development process may also rest with the end user."

SCO's lawsuit against IBM offers no specific examples of allegedly pirated code and SCO has consistently declined to provide any proof since filing suit to prevent the plagerism, it says, from being eradicated by the open source community before the case wends its way to court, a process that could take years.

SCO's infringement claims have enraged the open source community and its lack of evidence has led many to conclude it's holding an empty hand, and that its suit against IBM is only a device to get acquired because of its dicey financial condition.

SCO claims the acquisition angle is highly overrated though still a possibility. Gartner figures that if IBM were found to be infringing, it would more than likely settle the case rather than acquire SCO.

SCO's market cap, an indication of what it would take to buy the outfit, has been spiraling of late and is currently $52 million, topping its 52-week high.

SCO CEO and president Darl McBride, in an interview Wednesday evening with this reporter, said that he would "take all of SCO's intellectual property and donate it to open source if it turns out that there's no code from SCO in Linux." If, on the other hand, after analysis, any violations are found, he wants "anyone shipping Linux to pay a royalty." He suggested there would be different levels of payment assessed on vendors and users.

McBride said SCO has three separate groups of independent "code jockeys" auditing and comparing UnixWare, Linux, and AIX. None of the investigators are lawyers. One he described as a "world-class group of mathematicians" familiar with "pattern recognition." The second he said were people who are reconstructing how the Linux code base was actually developed and where all the contributions came from. The third is doing a traditional line-by-line comparison between SCO's IP, AIX, and Linux.

All three, he said, working separately and under Chinese Wall conditions had found "significant blocks of our code... inside Linux" in the last week or two. Not all of them, he said, are finding exactly the same alleged infringements.

McBride described the "evidence of violations of our code base" as being "very clear...as clear as a bell." The evidence, he said, persuaded SCO to write its letter and withdraw from the Linux market.

McBride said "the phone was ringing off the hook" in response to the letter and claimed that he "can't believe" that the company "was not getting pushback" or being "challenged." Callers, he said, expressed no surprise and wanted to know what SCO wanted.

Such cannot be said of the liberal press, the Slashdot contingent or the father of Linux Linus Torvalds.

McBride said that the companies using Linux should "get a legal opinion." To allay their doubts, he said, he is willing to share his evidence with them under what he called "strict non-disclosure."

SCO's own SCO Linux and Caldera OpenLinux customers, by the way, have no worries, SCO said.

Although IBM's spokesmen have claimed that its AIX license is "irrevocable and perpetual," SCO has threatened to lift it on June 13, when its 100-day notice expires, unless IBM cures its alleged disclosure violations. In the face of this threat, IBM has reportedly maintained a stony silence - or has until the last few days. According to McBride and SCOsource boss Chris Sontag, the SCO executive responsible for monetizing SCO's IP, they are now "in discussions about having discussions," with McBride remarking in passing that "litigation is the ultimately form of negotiation."

SCO contends that Linux distributors like Red Hat have no business model, or possibility of creating one. "Everybody loses money," McBride said. "Running cash negative," he added, referring to Red Hat, "is as good as it gets."

His own Unix business is half of what it was a couple of years ago and SCO's claim is that by buttressing Linux with Unix code, IBM "destroyed the economic value of Unix."

At the end of February SCO predicted that it would see $23 million-$25 million in revenues in its second quarter ended April 30: $13 million-$15 million out of its operating systems - though negligibly out of Linux - and $10 million out of some unexplained SCOsource licenses.

On Wednesday, two weeks before it posts its numbers, it said it would come up a bit short and see about $21 million in Q2 revenues: $12.8 million from operating systems, and only $8.2 million from IP royalties.

It did, however, say that it had signed a second "substantial" SCOsource license - again with an unidentified somebody - and that it would report a profit for a change of $4 million, or 29 cents a share.

Sources have claimed that Microsoft cut a licensing deal with SCO .

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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