[TUHS] IBM doesn't intend to respond to SCO's threat

[Kenneth Stailey]

http://www.eetimes.com/sys/news/OEG20030606S0039

Linux-Unix ties spelled out

By Charles J. Murray
EE Times
June 6, 2003 (5:08 p.m. ET)

PARK RIDGE, Ill. — SCO Group revealed the foundation of its legal battle with
the Linux community, when it rolled out evidence of large blocks of Linux code
that it contends were stolen from Unix. Analysts who saw the samples of the
allegedly stolen code said the evidence is damaging and that SCO Group has a
formidable legal case.

“If everything SCO showed me today is true, then the Linux community should be
very concerned,” said Bill Claybrook, research director for Linux and
open-source software at the Aberdeen Group (Boston).

If SCO (Lindon, Utah) prevails in its legal efforts, many observers believe the
action could, at best, result in hundreds of multimillion-dollar licensing
payments from Fortune 1000 companies and, at worst, damage the foundation of
open-source software.

The revelations by the SCO Group Wednesday (June 4) followed a turbulent week
in which the company exchanged both allegations and counterallegations with
Linux supporters and with Novell Inc. (Provo, Utah), which has proclaimed in an
open letter that SCO doesn't own the copyrights and patents to Unix, the
operating system Novell sold to SCO in 1995.

SCO's revelations also served as a response to the Linux community, which has
complained over the past two months that it doubted SCO's contentions of theft
because the company had not publicly disclosed evidence to support its claims.

Claybrook and another analyst who had been given an opportunity to see examples
of the alleged theft said the blocks of Unix and Linux were strikingly similar.
The two blocks of software, they said, contained as many as 80 lines of
identical code, along with identical developers' comments.

“One could argue that developers could write exact or very similar code, but
the developers' comments in the code are basically your DNA, or fingerprints,
for a particular piece of source code,” said Laura DiDio, a senior analyst with
the Yankee Group (Boston), who viewed the evidence.

“It's very unlikely that code and comments could be identical by pure chance,”
Claybrook said.

DiDio and Claybrook said they were given side-by-side copies of Unix and Linux
code to compare. Neither was paid for the work, and both agreed that the
evidence suggests SCO has a strong case in its $1 billion suit against IBM
Corp. and in its scrap with the Linux community.

Linux supporters, however, were quick to question the meaning of the evidence.
“Can SCO prove that this code came from SCO to Linux, and not from Linux to
SCO?” asked Jon “Maddog” Hall, executive director of Linux International
(Nashua, N.H.), a Linux advocacy organization. “Or did the code that's in SCO
Unix come from a third source? Show me the facts,” he said.

SCO's battle with the open-source community grabbed headlines two months ago
when it filed a $1 billion lawsuit in the state court of Utah against IBM,
alleging misappropriation of trade secrets and unfair competition in the Linux
market. In May, on the heels of that suit, SCO sent letters to Fortune 1,000
companies and 500 other businesses advising them to seek legal counsel if they
use Linux.

SCO's actions angered Linux supporters, who allegedly deluged the company with
angry e-mails, threatened drive-by shootings, and posted SCO's executives' home
phone numbers and addresses on Web sites.

On May 28, Novell jumped into the fray, arguing that it never sold the Unix
copyrights or patents to SCO when it consummated the Unix sale in 1995. In an
open letter to SCO, Novell said, “Apparently you share this view, since over
the last few months you have repeatedly asked Novell to transfer the copyrights
to SCO, requests Novell has rejected.”

Novell assailed

In a subsequent news conference on May 30, SCO chief executive officer Darl
McBride lashed out at Novell, restating SCO's claim that it owns the Unix
operating system patents and implying that Novell has a hidden agenda for
insisting otherwise.

“We strongly disagree with Novell's position and view it as a desperate measure
to curry favor with the Linux community,” McBride said.

Last week's analyst revelations, however, cast the battle in a new light. Until
the analysts weighed in, Linux backers had relied on the defense that no one
had seen proof of the allegations. Most said they didn't understand why SCO had
refused to release the alleged infringements for public scrutiny. Some said
they viewed SCO's actions as a means to spread fear, uncertainty and doubt
about open-source software.

But analysts categorically disagreed with that viewpoint last week. “SCO is not
trying to destroy Linux,” said DiDio of the Yankee Group. “That's silly. This
is about paying royalties.”

SCO contends that by co-opting code from Unix, Linux has severely damaged SCO's
intellectual property.  According to some estimates, the company collected
annual revenue of between $200 million and $250 million on Unix System 5 (sic)
software before the rise of Linux.  After Linux reached the mainstream, those
revenue figures dropped to about $60 million a year.

Because it believes Linux incorporates code that's been “stolen” from Unix, it
has warned hundreds of companies to stop using Linux or start paying royalties.

“SCO's words were that Linux distributors and others who are using Linux are
'distributing stolen goods,' ” said Claybrook of Aberdeen Group.

Some companies, such as Sun Microsystems Inc., already pay hefty royalties to
SCO for Unix.  Two weeks ago, Microsoft Corp. joined that group when it agreed
to pay royalties that were said to be “significantly in excess of $10 million,”
one source said.  Microsoft declined to comment on the details.

Facing a choice

Many observers believe SCO's case is bolstered by the fact that it is
represented by high-powered attorney David Boies, who prosecuted the Microsoft
antitrust case and represented Al Gore in the 2000 presidential election
vote-counting scandal.

Analysts said IBM will be the first company to face a choice in the legal
matter.  “If IBM wants to cure this problem, they could start by buying all the
appropriate licenses and then paying SCO a billion dollars,” Claybrook said.
“But SCO now says that a billion may not be enough to cover their damages.”
Users of Linux also face a decision about whether to ignore SCO's letters or
pay for a license.  Analysts said companies may face that decision as soon as
June 13, the date on which SCO has threatened to terminate its existing Unix
contracts with IBM.

Intellectual-property attorneys advise that companies that received a letter
from SCO first determine whether IBM is indemnifying them, as users, against
legal action.

IBM, for its part, has said it doesn't intend to respond to SCO's threat. “We
believe our contact is perpetual and irrevocable,” an IBM spokeswoman said.
“We've already paid for it, and there is nothing else we need to do.”

Whether the legal actions will harm Linux in the long run is still open to
question, experts said.

The Linux community, unconvinced by SCO's actions, says it is still waiting for
more solid proof that SCO really has a case. Most say that showing the alleged
violations to a few analysts who sign nondisclosure agreements isn't enough.

“We still don't see the need for secrecy,” said Hall of Linux International.


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