SCO v. IBMOn March 7, 2003, the SCO Group (formerly known as Caldera Systems) filed a $1 billion lawsuit in the US against IBM for allegedly "devaluing" its version of the UNIX operating system. The amount of alleged damages was later increased to $3 billion, and then $5 billion. SCO claimed that IBM had, without authorization, contributed SCO's intellectual property to the codebase of the open source, Unix-like Linux operating system. In May 2003 SCO Group sent letters to members of the Fortune 1000 and Global 500 companies warning them of the possibility of liability if they use Linux. Because of this, the stock price of SCO's stock (Nasdaq stock symbol SCOX) skyrocketed, although it has since returned to near its original level. Since then, the claims and counter-claims made by both sides have escalated, with both IBM and Linux distributor Red Hat starting legal action against SCO, and SCO making threatening remarks toward Linux users who do not take out SCO UNIX licences. On September 30, Judge Kimball granted the SCO Group's request for a delay until February 4, 2004, "to file any amended pleadings or add parties to this action". This pushes the start of the actual lawsuit back until 2005. This article also discusses related lawsuits against Novell, DaimlerChrysler and AutoZone.
Free software/open source community reactionThe lawsuit caused outrage in the free software and open source communities, who consider SCO's claims to be without merit. Open source advocates' arguments include:
The GPL issueWithin a few months of the filing of the lawsuit, Eben Moglen, the Free Software Foundation's legal counsel, stated that SCO's suit should not concern Linux users other than IBM. In an interview with internetnews.com, he was reported as saying:\n:"There is absolute difficulty with this line of argument which ought to make everybody in the world aware that the letters that SCO has put out can be safely put in the wastebasket," ...
The GPL and the US ConstitutionSection 8 of Article One of the United States Constitution states that
Novell enters the controversyNovell entered the controversy by publishing on May 28 a press release concerning the SCO Group's ownership of UNIX. "To Novell's knowledge, the 1995 agreement governing SCO's purchase of UNIX from Novell does not convey to SCO the associated copyrights," a letter to the SCO Group's CEO Darl McBride said in part. "We believe it unlikely that SCO can demonstrate that it has any ownership interest whatsoever in those copyrights. Apparently you share this view, since over the last few months you have repeatedly asked Novell to transfer the copyrights to SCO, requests that Novell has rejected." SCO later claimed to have discovered an amendment to their contract with Novell transferring partial ownership to SCO. Novell stated that the amendment "appears to bear a valid Novell signature, and the language, though convoluted, seems to support SCO's claim that ownership of some copyrights for Unix did transfer to SCO"; Novell also said that it could not find its own copy of the amendment. But in subsequent letters to SCO that Novell released on December 22, Joseph LaSala Jr, Novell's general counsel, argued that the amendment provided for a copyright transfer only under certain conditions that SCO has allegedly failed to meet. SCO was quick to dismiss Novell's claims. "We see this as a fraudulent filing of copyright notices ... and we'll take the appropriate measures as necessary with our legal team," SCO CEO Darl McBride said during a conference call held to discuss his company's most recent financial results.Fear, uncertainty and doubtA number of Linux supporters have characterized SCO's actions as an attempt to create fear, uncertainty and doubt about Linux. Many believe that SCO's aim is to be bought out by IBM. Others have pointed to Microsoft's subsequent licensing of the SCO source code as a possible quid pro quo for SCO's action. Univention GmbH, a Linux integrator, reported on May 30, 2003 it was granted an injunction by a Bremen court under German competition law that prohibits the SCO Group's German division from saying that Linux contains illegally obtained SCO intellectual property. If the SCO Group continues to express this position, they would have to pay a fine of 250,000 Euros. A similar injunction was sought around the same time in Poland. On July 23, Open Source Victoria announced that they had filed a complaint with the Australian Competition and Consumer Commission, "asking the ACCC to investigate the SCO Group's activities in light of their unsubstantiated claims and their extortive legal threats for money against possibly hundreds of thousands of Australians." SCO Group then filed subpoenas for Richard Stallman and Linus Torvalds on November 13, 2003. [1]Allegations of reverse copyingEWeek has reported allegations that SCO may have copied parts of the Linux kernel into SCO UNIX as part of its Linux Kernel Personality feature (see the EWeek report below). SCO has denied these allegations. Some open-source advocates have suggested that, if true, this may effectively have obligated SCO to release SCO UNIX source under the terms of the GPL to customers who have received SCO UNIX binary distributions.IBM's AIX licenceReuters reported that the SCO Group intended to revoke IBM's licence to use UNIX code in their AIX operating system on Friday, June 13, 2003 if no resolution is reached before then. IBM responded that they believe that SCO has no power to do so, as their license is "irrevocable". On the following Monday, June 16, 2003, CNET News.com reported that SCO had announced it had terminated IBM's licence. IBM continues to distribute and support AIX, and the SCO Group now states that they will be seeking an injunction to force IBM not only to stop selling and supporting AIX, but to return to the SCO Group or destroy all copies of the AIX operating system.Scheduler code claimsAlso on June 15, 2003, postings on Slashdot and The Inquirer reported claims that:\n* SCO's claimed copied code was shown without NDA in Germany by mistake\n* the code seen was in the Linux kernel scheduler, one of the most heavily-scrutinized parts of the Linux kernel\n* The dates on both pieces of code were censored, which might mean that SCO could have copied from Linux.Increased damages claims, and read-copy-update claimsAs of June 17, 2003, CNET News.com reported that SCO has increased its claims of damage to $3 billion, and has stated that the read-copy-update code in the Linux kernel is an example of code that infringes its rights. This technique is widely believed to have been developed at Sequent Computer Systems, who were then bought by IBM, who holds several patents (including 5,442,758) on this technique.SCO announces that it will not sue its own customersOn June 23, 2003, SCO sent out a letter announcing that it would not be suing its own Linux customers. [1] In the letter, it states:\n:SCO will continue to support our SCO Linux and OpenLinux customers and partners who have previously implemented those products and we will hold them harmless from any SCO intellectual property issues regarding Linux.\nSome observers have stated that in doing so, SCO may have granted the same rights to other Linux users who obtained a copy of Linux from an SCO partner under the terms of the GPL. Others have stated that to "hold someone harmless" is different from a grant of rights, and that SCO has not made a grant of rights in writing this letter. Others believe that this letter is moot, as a grant of rights was made by SCO by the act of releasing the software under the GPL in the first place. This action may also signal the grounds for a GPL violation suit against SCO as it is seeking different terms of distribution of works for its own customers than other recipients of the same work.SCO's "Linux licensing program"On July 21, 2003, SCO announced that it intends to sell binary-only licences to use the free Linux operating system which will remove the threat of litigation from licence-holders. Linux advocates reacted by stating that SCO has no basis for this action, as their claims were still disputed in court, and that the terms of the GPL seemed to indicate that doing this may cause SCO to forfeit their rights to distribute Linux or Linux-derived code in any form. On August 5 2003, SCO's Darl McBride announced the company's final licensing fees requested from end users for the use of Linux; a single-CPU server license will cost US $699 until October 15, 2003, and $1,399 afterward, while licenses for desktop and embedded systems will currently cost US $199 and US $32, respectively. [1] [1] Prices for server systems with more than one CPU range from US $1,149 for two CPUs to US $2,499 for four CPUs and US $4,999 for eight CPUs, with each additional CPU being priced at US $749. All of these prices, including the ones for desktop and embedded systems, are scheduled to be increased on October 15, 2003.Red Hat legal action and SCO's responseOn August 4, 2003, it was reported that Red Hat has filed a legal action against SCO ([1], [1]). According to the filing, Red Hat has requested that the court make:\n* a permanent injunction against SCO's campaign against Linux \n* a number of declaratory judgments \n**that Red Hat has not violated SCO's copyright\n**that Red Hat has not violated SCO's trade secrets rights\n**and several other claims for relief SCO replied with both a press release and two letters to Red Hat on the same day ([1]); their claims are reiterated in the press release ("Linux includes source code that is a verbatim copy of UNIX and carries with it no warranty or indemnification. SCO's claims are true and we look forward to proving them in court."), and the allegations made by Red Hat are denied ("SCO has not been trying to spread fear, uncertainty and doubt to end users.") The letters to Red Hat also hint at possible legal retaliations against Red Hat, saying:
IBM counterclaims against SCOOn August 6, 2003, IBM filed their counterclaims against SCO. [1] [1] They make 10 counterclaims, including:\n* breach of contract\n* Lanham Act violation\n* Unfair competition\n* Unjust enrichment\n* Intentional interference with prospective economic relations\n* Unfair and deceptive trade practices\n* Breach of the GNU General Public License\n* and four counts of patent infringement In response to these counterclaims, SCO has asserted that the GPL is unenforcible, void, and violates the United States Constitution. If these claims are true, then the GPL'd applications that SCO continues to distribute (like Samba) are being distributed without the permission of the copyright owners of those applications (since the permission was the GPL itself), which would be illegal. Thus some speculate that, in order to remain legally consistent, SCO will claim that software that has been GPL'd is actually in the public domain.DiscoveryThe discovery portion of the lawsuit has been dragging on for an unusual amount of time. The basis for SCO's suit is that any code developed on top of SVR5 is a derivative work of SVR5 (which would include AIX), and that IBM has publicly admitted to contributing AIX code to the Linux kernel. Since SCO has never seen the AIX code, it has, as part of the discovery process, deposed IBM for the AIX code, so that it can compare AIX code to Linux kernel code. IBM, rejecting SCO's concept of derivative work, has deposed SCO for which lines of code it claims are infringing. SCO has responded that it can't determine which code is infringing until it has had the chance to look at the AIX code.Examples of controversial code revealed
New IBM counterclaimsOn September 26, 2003 IBM filed new counterclaims against SCO Group involving alleged copyright infringement by SCO of GPL-licensed IBM code in the Linux kernel. [1] Some commentators have pointed out that if SCO manages to invalidate the GPL, they are highly likely to be caught by this counterclaim, as it is of the same form as their claim against IBM.SCO acts against SGIOn October 1, 2003 the SCO Group announced that they would be revoking SGI's UNIX license for code it contributed to the kernel Linux. The source of this code was identified after it was shown at a reseller show.First discovery hearingOn December 5, 2003, in the first oral arguments relating to the discovery process, a judge granted IBM's two motions to compel against SCO, and deferred consideration of SCO's motions until later. This gave SCO a 30 day deadline to provide "with specificity" which lines of code in Linux they claim form the basis of their case. This was widely regarded as a first-round victory for IBM. [1] PDFCopyright claims, December 2003In late December 2003, new developments involving copyright claims emerged. Novell registered their claim to the copyright of original UNIX source code, effectively challenging SCO's registration of the same code. [1] [1] SCO claimed in a press release to have sent DMCA notification letters alleging copyright infringement class="external">[1\nAlleged copies of these letters were posted online at Groklaw and LWN. The letters give the names of 65 files in the Linux source code tree which supposedly incorporate "copyrighted binary interfaces". A rebuttal by Linus Torvalds was then posted on Groklaw.SCO extracts unspecified license fee from EV1Servers.netOn March 1, 2004, SCO announced it had reached a license agreement with EV1Servers.net, which allowed EV1Servers to use some of SCO's "intellectual property". SCO's Blake Stowell claimed the deal was worth upward of "seven figures" ($1,000,000) while a few days later EV1Servers CEO Robert Marsh claimed the amount was much lower. The exact amount was required to remain secret under terms of the agreement.SCO sues AutoZone and DaimlerChryslerOn March 3, 2004, SCO sued AutoZone for "commercial use of Linux," according to Darl McBride. Then they sued DaimlerChrysler for allegedly not complying with the terms of their Unix license as originally purchased from AT&T. Published reports say that by examining deleted material in the Microsoft Word files containing the complaint, SCO was originally going to sue Bank of America instead of DaimlerChrysler.Microsoft funding of SCO confirmedOn March 4, 2004, a leaked SCO internal email detailed how Microsoft has paid SCO over $100 million, via the Baystar deal and other means [1]. Blake Stowell of SCO confirmed the memo was real [1]. Baystar claimed the deal was suggested by Microsoft, but that no money for it came directly from them. Microsoft, at the time, had $550 million invested with Baystar. [1].CEO of EV1Servers.net regrets license agreement with SCOAn IDG News Service interview with Robert Marsh, CEO of EV1Servers.net, was published on March 25, 2004. [1] He expressed his regret at signing an agreement with SCO: "Would I do it again? No. I'll go on the record as saying that." Postings to the EV1Servers.net user forums revealed that some of the larger customers were consulted beforehand and wanted EV1 to make the deal out of fear that a lawsuit from SCO could shut down their servers. However, a large and vocal opposition was not consulted and made its displeasure known afterward. Some say Marsh publicizing his regret will harm SCO's cause more than if they hadn't signed the deal at all, while others feel he is just trying to talk nice to avoid losing any more customers.BayStar letterOn April 16, 2004 SCO announced in a press release that BayStar had demanded that SCO redeem 20,000 shares of SCO A-1 Convertible Preferred Stock. At $1000 per share, this would cost SCO $20M. SCO stated in their press release that they believed that BayStar did not have grounds for making this demand. [1] On April 22, 2004, The New York Times (p.C6) reported that BayStar Capital, a private hedge fund which had arranged for $50M in funding for SCO in October 2003, was asking for its $20M back. The remainder of the $50M was from Royal Bank of Canada. In 2003, BayStar looked at SCO on the recommendation of Microsoft, according to Lawrence R. Goldfarb, managing partner of Baystar Capital: "It was evident that Microsoft had an agenda". The April 15, 2004 letter to SCO asserted that SCO's management had breached certain provisions (detailed above) of the investment agreement with BayStar; Goldfarb stated that if SCO reformed its management practices (spending and focus), "BayStar might keep its funds in SCO".Allegations regarding ELF file formatIn an article that appeared at linuxworld.com in July 2004, several claims were revealed from court filings in the SCO Group lawsuit. Most notably, SCO Group claims that the use of the Executable and Linking Format (ELF) in Linux infringes on SCO copyrights. ELF originally was defined as part of Unix System V, but in 1995, the format was published as an industry standard. SCO Group claims that the Tool Interface Standard Committee (TISC), which published the standard, overstepped its rights in granting a blanket non-exclusive license to use ELF. Novell, the owners of System V at the time of the ELF standard's publication, were on the standards committee and presumably agreed to the license terms. Since ELF is used throughout Linux and GNU operating systems, restricting the use of ELF would be a major blow to Linux. The fact the Novell was on the TISC seems damaging to SCO Group's claims, but as of this writing, no court has issued a ruling on the validity of the claims.External linksPress coverage
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