In-Depth

SCO to Linux Users: Get Licensed or Face Possible Litigation

In light of new copyright, analysts say customers should factor in the potential for liability when making Linux purchasing decisions

• By Stephen Swoyer
• 07/29/2003

SCO’s actions have prompted at least one influential analyst firm—Gartner Inc.—to recommend that IT organizations mulling Linux deployments consider Windows or Unix options instead.

SCO targeted IBM Corp. with a $1 billion lawsuit in early March. In May, the embattled vendor sent letters (http://info.101com.com/default.asp?id=1525) to at least 1,500 global companies, warning them that they—and not the vendors that sold them Linux in the first place—could be held liable for their use of the open source operating system. “Don’t just take our word for it … Seek the opinion of legal counsel, get your own counsel to take a look at the Linux licenses you have, and see where the liability resides,” said Chris Sontag, SCO senior vice president and general manager of its SCO Source IP licensing initiative, at the time.

Last week, SCO announced a program that will allow commercial users of Linux to purchase special licenses that support run-time, binary use of the operating system. “We have a solution that gets you clean, gets you square with the use of Linux without having to go to the courtroom," said SCO CEO Darl McBride during a conference call last Monday.

Company representatives say that the price of its Unix System V licenses will be announced over the next few weeks and will probably be based on the cost of version 7.13 of SCO UnixWare.

Change of Plan

Central to SCO’s new gambit is the fact that it has registered and received U.S. copyrights for the Unix System V source code. According to SCO lead attorney David Boies, SCO needed to register its Unix System V copyrights before it could take action to enforce them.

The upshot, says Gordon Haff, a senior analyst with consultancy Illuminata, is that SCO can now sue global users of Linux—if it chooses to do so.

“I think there is some legitimate level of concern about Linux intellectual property and what could be the results of SCO’s case. I think to simply dismiss it as a non-issue on pretty much anybody’s part would really be sticking your head in the sand,” he comments.

As a result, he acknowledges, companies must evaluate the potential for litigation, along with other, more conventional, concerns, as they make decisions about operating environments and applications. “Basically, when you’re choosing between operating systems, you have a whole host of issues to consider in your decision making. Should the fact that there could be some intellectual property issues with Linux be one of them? Sure. But so should robustness, so should scalability, so should security, so should price, services, a whole list of things.”

At the same time, Haff allows, SCO’s strategy is still largely based on FUD (fear, uncertainty, and doubt). “On the other hand, so far, I haven’t seen anything presented that would cause somebody to worry seriously,” he notes. “So at this point, I would not put concerns about Linux intellectual property high on the list [of concerns that companies should consider]. Certainly, I don’t see SCO coming out of this with a bunch of companies willing to pay it for a UnixWare license to use Linux.”

Gartner Covers Its Backside

In a recent Gartner research bulletin, analyst George Weiss speculated that if SCO successfully pressures companies to purchase UnixWare licenses—or to delay their Linux purchases—the consequences could be manifold: Linux could have trouble evolving beyond infrastructure roles, for starters, even as vendors that have bet big on the open source Wunderkind—including Red Hat, SuSE, IBM and Oracle—could suffer significant setbacks.

As a result, Weiss suggested that companies contact SCO to discuss its compensation requirements as well as their potential for future liability. Gartner estimates that a single unit license of UnixWare could cost from $500 to $700 per server, with discounts for volume deployments.

Most important, Weiss noted, organizations should “[delay] deployments of application and database servers if they involve critical applications that must be unencumbered of IP infringement claims.” Weiss noted that companies tbat have deployed Linux in basic infrastructure roles—such as firewalls and simple Web servers—should be okay, as such services are typically powered by uni-processor systems that aren’t based on version 2.4 of the Linux kernel.

Significantly, Weiss counseled against widespread belief that IBM will win its lawsuit against SCO. “Don't ignore the problem by hoping IBM will win or settle its lawsuit … An IBM win would not prevent SCO from pursuing individual claims, which, if successful, could cost far more in penalties than buying a SCO license would. If you find SCO's case compelling and you use few instances of v.2.4, pay the license fees,” he wrote.

For companies that want to invest in Linux, Weiss suggested exploring outsourcing, system integration, or other arrangements in which liability is transferred to a third party. Otherwise, he counseled, “While the actions by SCO are pending, take a go-slow approach to Linux in high-value or mission-critical production systems. Instead, keep pursuing your Unix and Windows strategies.”

Weiss has been unusually circumspect to the threat posed by SCO for some time now. In a research bulletin he wrote in late May, Weiss suggested that customers should consider minimizing the use of Linux in complex or mission-critical systems (http://info.101com.com/default.asp?id=1571) until SCO’s strategy came into sharper focus.

Global Companies Unfazed by SCO Threat?

If research firm Netcraft is to be believed, the number of companies running Linux in support of Web sites has actually increased over the last two months—the same period during which SCO has escalated its fight.

Over the last two months, a new Netcraft study finds, Linux notched a net gain of more than 100 enterprise sites among 24,000 Web sites operated by 1,500 global companies.

Companies that have switched to Linux include Deutsche Bank, Royal Sun Alliance, Schwab, SunGard and T-Online.