SCO Preparing Legal Action Against (AIX/Dynix/Linux) Customer

SCO Group Inc is preparing to take a Linux user to court to speed up the legal process in its claim Unix code has been illegally copied into Linux, and also encourage Linux users to take out a license for its intellectual property.

The company has signed one large customer up to its Intellectual Property License for Linux, but faces opposition from many more who believe SCO must prove its claims in a court of law before they will hand over the $700 per CPU for the license.

Speaking at SCO's Forum event in Las Vegas, president and CEO Darl McBride said SCO preparing to speed-up the legal process and convince the skeptics. "We are prepared to have this heard on a quicker basis in a customer environment if that's what it takes to quicken it up," he said.

Talking to ComputerWire, McBride added SCO is identifying Linux users for possible litigation. He said SCO had for the last month gathered information on Linux users, and identified about 10% of the total Linux servers sold last year. McBride added that he expected that figure to rise to 40% over the coming weeks before SCO would take action.

SCO has three groups working on identifying and approaching Linux users. The first is drawing up the list, the second will send out letters offering the chance to license the code SCO says has been copied into Linux, and the third will take legal action against those who refuse.

McBride said SCO was likely to be selective about who it targets, probably choosing a company using IBM Corp's AIX and Dynix operating systems as well as Linux, so it can settle several legal arguments in one go. "Instead of doing mass-mailings we're now taking a very targeted approach," he said.

Choosing a user of AIX and Dynix would help the company to back up its position that it terminated IBM's licenses for Unix in AIX and Dynix in June and August respectively. SCO has alleged IBM donated Unix code to Linux and is suing the company for misappropriation of trade secrets, breach of contract and unfair competition.

SCO executives and representatives, meanwhile, used Forum to repeat earlier criticism of the General Public License (GPL), which it said has forced it to take action against Linux users, despite being able to identify which companies and individuals are responsible for copying its code into Linux.

"There's a bouncing ball that ends up in the hands of customers because of the GPL," said McBride.

Chris Sontag, senior vice president and general manager of the company's SCOsource business, added: "There is no warranty for infringement of intellectual property [in the GPL], so all of the liability ends up with end users."

Mark Heise, of law firm Boies Schiller and Flexner, representing SCO against IBM, believes SCO is entitled to pursue users based on its claims. "End users are improperly using this copyrighted material, and under copyright law SCO is entitled to damages and injunctive relief," he said.

Sontag warned users that ignoring SCO's requests to license the code in advance of a court case could be costly. "Those who have chosen to ignore the license are more in a situation of potential willful infringement," Sontag said.

The first thing I would like to say is the quality of computer threads has been abyssimally low as of late. Please make this discussion professional. I don't often post threads, and cat calls of commie foreigner, slave to the Red Army, traitor and shill are likely to discourage me from posting more.

First I would like to make a comparison between Microsoft and SCO. Microsoft listened to their customers and did not discontinue Outlook Express. This is a good thing. For all the things that can be said about Microsoft, they have not to my knowledge sued the customers of their rivals.

This is further evidence of the litigious society. If this trend continues, eventually the United States will be just like Paraguay where everyone sues everyone else just to get buy.

Note that while SCO criticizes the GPL this is not the question of the lawsuit. SCO is targetting customers who are running AIX, Dynix, and Linux, in contravention to SCO having pulled IBM's UNIX license. It is unclear whether SCO has the authority to revoke IBM's license, but the terms of IBM's license with AT&T is unknown.

``There is no warranty for infringement of intellectual property [in the GPL], so all of the liability ends up with end users.''

I have to wonder if SCO's attornies have read the GPL. Software licenses are written by the authors of software. There are no standards of what should be in a software contract such as they are in rental agreements in my state. Any contract, even the GPL is binding unless proved otherwise and the standards for a judge declaring a contract invalid are high. This is because people have a right to enter into contracts, and likewise they are generally held liable for the agreed terms. It is not good for the economy and the county if contracts are held invalid on a regular basis, because this means people would be able to wiggle out of their agreements with no liability. This is exactly what happens in Paraguay. The government in Paraguay is that of men not laws. Enforcing contracts is a component of a government of laws not men. Just because SCO doesn't like the GPL does not mean that they can ignore it!

However, it is unfair to say that the GPL does not have any provisions dealing with intellectual property.

7. If, as a consequence of a court judgment or allegation of patent infringement or for any other reason (not limited to patent issues), conditions are imposed on you (whether by court order, agreement or otherwise) that contradict the conditions of this License, they do not excuse you from the conditions of this License. If you cannot distribute so as to satisfy simultaneously your obligations under this License and any other pertinent obligations, then as a consequence you may not distribute the Program at all. For example, if a patent license would not permit royalty-free redistribution of the Program by all those who receive copies directly or indirectly through you, then the only way you could satisfy both it and this License would be to refrain entirely from distribution of the Program.

If any portion of this section is held invalid or unenforceable under any particular circumstance, the balance of the section is intended to apply and the section as a whole is intended to apply in other circumstances.

It is not the purpose of this section to induce you to infringe any patents or other property right claims or to contest validity of any such claims; this section has the sole purpose of protecting the integrity of the free software distribution system, which is implemented by public license practices. Many people have made generous contributions to the wide range of software distributed through that system in reliance on consistent application of that system; it is up to the author/donor to decide if he or she is willing to distribute software through any other system and a licensee cannot impose that choice.

Furthermore...

10. If you wish to incorporate parts of the Program into other free programs whose distribution conditions are different, write to the author to ask for permission. For software which is copyrighted by the Free Software Foundation, write to the Free Software Foundation; we sometimes make exceptions for this. Our decision will be guided by the two goals of preserving the free status of all derivatives of our free software and of promoting the sharing and reuse of software generally.

The GPL does not take away the rights of proprietary software developers to release software under the terms they desire. The GPL only preserves software released under it, to remain under it.

11. BECAUSE THE PROGRAM IS LICENSED FREE OF CHARGE, THERE IS NO WARRANTY FOR THE PROGRAM, TO THE EXTENT PERMITTED BY APPLICABLE LAW. EXCEPT WHEN OTHERWISE STATED IN WRITING THE COPYRIGHT HOLDERS AND/OR OTHER PARTIES PROVIDE THE PROGRAM "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PROGRAM IS WITH YOU. SHOULD THE PROGRAM PROVE DEFECTIVE, YOU ASSUME THE COST OF ALL NECESSARY SERVICING, REPAIR OR CORRECTION.

12. IN NO EVENT UNLESS REQUIRED BY APPLICABLE LAW OR AGREED TO IN WRITING WILL ANY COPYRIGHT HOLDER, OR ANY OTHER PARTY WHO MAY MODIFY AND/OR REDISTRIBUTE THE PROGRAM AS PERMITTED ABOVE, BE LIABLE TO YOU FOR DAMAGES, INCLUDING ANY GENERAL, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE THE PROGRAM (INCLUDING BUT NOT LIMITED TO LOSS OF DATA OR DATA BEING RENDERED INACCURATE OR LOSSES SUSTAINED BY YOU OR THIRD PARTIES OR A FAILURE OF THE PROGRAM TO OPERATE WITH ANY OTHER PROGRAMS), EVEN IF SUCH HOLDER OR OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

One thing of note is that SCO continues to maintain that Linux users owe them license fees depite the fact that the subject is in dispute. Most companies are notably tight-lipped about pending litigation, a quality that SCO lacks. Because SCO is making claims about the ownership and fiduciary liability of Linux before it is proved in court, they may run afoul of the Federal Trade Commission for deceptive trade practices.

SCO is targetting Dynix/IBM customers before Linux only shops as of yet. To me it looks as if this suit has been brought to answer the question of IBM's UNIX license. I would not be suprised if IBM holds a perpetual and irrevokable license from AT&T.

I'm not an attorney, but I cannot recall any business lawsuit in any industry in which the plaintiff was so apparently reckless. I believed when they had filed the suit with IBM that they had a case. I didn't agree with it, but I thought they might have grounds from with to pursue a lawsuit. I can't recall anything in the news like it, in which a plaintiff made such sweeping statements about the ownership of the products of a compeditor, and about the business community and the government owing them royalties. These two claims would seem to mesh perfectly with part of the definition of deceptive trade practices.

SCO has made (as yet) unproved statements about the ownership of IBM's products as well claiming that a broad segment of the industry owes them money. In my opinion, these are the kinds of thing that SCO should only say after a successful verdict has been reached. The standard for determining deceptive trade practices is not even that statements need to be proven as false -- only that the company had the capacity to make false statements.

On the other hand the standard for dertimining whether a work is a derivative work is rather easy. Copyright infringement is based on whether the defendant had some legitimate interest in the copyright work, and whether the work constitutes a derivative work. When considering whether a work that includes the copywrighted work of others is an infringement or a derivative work, there is a standard used to determine how much effort was put into a work before it is considered an infringement. This standard, as with the standard for determining deceptince trade practices, is low.

So as I see it, SCO has several hurdles to overcome if it wants to prevail. Burden of proof is on them to prove: that IBM has absolutely no intellectual property rights to derivative UNIX works under its contracts with AT&T USL; that IBM has absolutely no intellectual property rights to NUMA, JFS, SMP, and copy-on-write; that if IBM did have intellectual property rights to NUMA, and etc that their rights to publish them was greatly restricted.

Even if they are able to prove all that, they still haven't proven that Linux isn't a derivative work. They must show that no minimal amount of effort was put into Linux to make it and isntead proprietary code is used throughout. They must show that Linux is actually a fraudulent copy of UNIX, that minimal effort was not put in it to make it work differently that proprietary UNIX.

Even if all this has been proven to be true, that Linux is simply a AT&T System V UNIX with open source window dressing, they still must face the FTC to prove that they did not have the capacity to make a false statement against IBM, Linux, and others.

Personally, I think SCO is in an uphill battle, and everything they have done has been to raise the stakes. If we were playing Texas Hold-em, I would say SCO has been dealt a pair of nines, but a pair of tens is showing on the flop.

What I want to know is, does this high-stakes game really in the best interests of Caldera/SCO's stockholders?

McBride said... "We are prepared to have this heard on a quicker basis in a customer environment if that's what it takes to quicken it up"
McBride said SCO was likely to be selective about who it targets, probably choosing a company using IBM Corp's AIX and Dynix operating systems as well as Linux, so it can settle several legal arguments in one go

Watch the amazing SCO bouncing ball in action in this article. First McBride says he wants to sue a customer to speed things up. Then he says he's going to make it an IBM customer, hopefully one using AIX.

Notice that the journalist does not say, "But sir, IBM does indemnify its AIX users against IP infringement. Won't including an AIX customer bring IBM into the case? And won't IBM's first move be to ask the judge to combine the case with the existing lawsuit, since similar claims are at issue in both? And isn't that case scheduled to go to trial in 2005? How exactly is this going to "speed things up"?

McBride never seems to get any hard questions from reporters, so he gets away with claiming that he wants to "speed things up" while simultaneously moving to make sure that any lawsuit he does file gets shoved into 2005. Why would he want that? Because SCO does not really want to go to court. They just want to rattle their swords in the press... while the Canopy Group shifts its properties around under the "shell" of SCO's press-inflated stock price.

Chris Sontag, senior vice president and general manager of the company's SCOsource business, added: "There is no warranty for infringement of intellectual property [in the GPL], so all of the liability ends up with end users."

See, if they really wanted to speed things up, they would sue some poor schmuck who can't afford very good lawyers and send David Boies in to squash him like a bug. But we don't see them doing that. That's because it would actually land them in a courtroom. And once they were on the docket, there's no telling what anonymous benefactor might send a busload of $800-an-hour lawyers from Cravath, Swaine, & Moore to help the poor guy out with his case. It could be quick all right, as in a summary judgement that end users are not liable for any of this stuff. That's the last thing McBride wants, so he won't risk going there. His job is to pump the price and stay out of court, for as long as possible.

you swore up and down SCO would never announce a price for Linux.

You're right: I did predict that. I could not believe that they would make an actual "offer to sell" when that would so obviously leave them open to criminal charges for fraud (misrepresentation of need).

But they did it. Let's see what happens as a consequence.

Now they're preparing to start suing people for illegal use and you claim that won't happen either.

I did? Where?

I no longer believe that these guys are getting actual legal advice before doing these things. They don't know what the hell they are doing, or what the consequences are likely to be. Who knows if they'll sue anybody? They say a lot of stuff and never do it. Then they do something even dumber.

Suing an IBM customer is the dumbest thing they could do. IBM will step right up, defend the sumbitch, and at that point the world will know that SCO isn't getting any license revenue before 2005. They won't be in business that long; they don't have hardly any revenue without those license fees, and they have some serious legal bills on the way.

This game is about over.

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