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SCO Group, Inc. v. International Business Machines Corp.

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On March 7, 2003, the SCO Group (formerly known as Caldera Systems) filed a $1 billion lawsuit in the US (recently tripled to $3 billion) against IBM for allegedly "devaluing" its version of the UNIX operating system. 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 has skyrocketted.

Since then, the claims and counter-claims made by both sides have escalated, with Linux distributor Red Hat starting legal action against SCO, and SCO making threatening noises towards Linux users who do not take out SCO UNIX licences.

SCO's claims

SCO has changed its claims repeatedly as the affair has progressed. At first, the claims were for breach of contract against IBM; then claims of copyright infringement emerged. SCO has also both claimed and denied that the alleged copyright violations involved the Linux kernel, then made general claims relating to components of Linux, without offering to give specific details, except under a non-disclosure agreement.

SCO's major claims have now been reported as relating to the following components of the Linux kernel:

Free software community reaction

The 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:

  • that the Linux operating system was unlikely to contain UNIX code, as it had been written from scratch by hundreds of collaborators, with a well-documented provenance and revision history that was entirely in the public view;
  • that it made no technical sense to incorporate SCO UNIX code in Linux, as Linux had the technical features that are claimed to have been appropriated already implemented before SCO UNIX had them;
  • that even if Linux and SCO UNIX had some code in common, this did not necessarily mean that this code was copied to Linux from SCO UNIX, rather than vice versa or perhaps the common pieces of code had been legitimately copied from another open source operating system, a BSD-derived one for example;
    • and furthermore, that if such reverse copying from Linux itself had occured, that the distribution of SCO UNIX binaries containing GPL'd contributions may therefore require the entire SCO UNIX code base to be released under GPL;
  • that even if Linux did contain copied SCO UNIX code, the UNIX source code had already been made widely available without a non-disclosure agreement, and therefore had no trade secret status;
  • that even if Linux did contain some UNIX code, the SCO Group had lost any right to sue IBM for trade secret or other intellectual property infringement by distributing Linux itself (their Caldera distribution) under the GNU General Public License (GPL), both before and after their announcement;
  • and finally, that even if SCO were to have a valid claim against IBM, their distribution of Linux under the GPL precludes them from pursuing any other user of Linux.

SCO and its officers have been the subject of much criticism by the free software community, some of whom have stated that SCO's behavior may amount to illegal conduct. SCO Group's CEO Darl McBride has been the subject of particular vituperation.

The GPL issue

According to Eben Moglen, the Free Software Foundation's legal counsel, SCO's suit should not concern Linux users other than IBM. In an interview with internetnews.com, he was reported as saying:

"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," ...
"From the moment that SCO distributed that code under the GNU General Public License, they would have given everybody in the world the right to copy, modify and distribute that code freely," ... "From the moment SCO distributed the Linux kernel under GPL, they licensed the use. Always. That's what our license says."

Apparently noticing the incongruity of their selling a Linux distribution while suing IBM for stealing their intellectual property and giving it to the developers of that operating system, the SCO Group then announced on May 14 that they would no longer distribute Linux. According to their press release, "SCO will continue to support existing SCO Linux and Caldera OpenLinux customers and hold them harmless from any SCO intellectual property issues regarding SCO Linux and Caldera OpenLinux products."

Novell enters the controversy

Novell 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 transfering 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.

What SCO claims

It has been reported that SCO has variously threatened to sue Linux users and even Linus Torvalds himself. Computerworld reported that SCO's Chris Sontag said, regarding the alleged infringements:

"It's very extensive. It is many different sections of code ranging from five to 10 to 15 lines of code in multiple places that are of issue, up to large blocks of code that have been inappropriately copied into Linux in violation of our source-code licensing contract. That's in the kernel itself, so it is significant. It is not a line or two here or there. It was quite a surprise for us."

On May 30, Darl McBride was quoted as saying that the Linux kernel contained "hundreds of lines" of code from SCO's version of UNIX, and that SCO would reveal the code to other companies under NDA in July. [1] To put this into context, David Wheeler's SLOCCount estimates the size of the Linux 2.4.2 kernel as 2,440,919 source lines of code out of over 30 million physical source lines of code for a typical GNU/Linux distribution. Therefore, as per SCO's own estimate, the allegedly infringing code would make up about 0.01% of the total code of a typical GNU/Linux installation. [2]

Fear, uncertainty and doubt

A 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, requesting that "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."

Reactions from Linus Torvalds

On May 30, Linus Torvalds was quoted by IDG.net as saying, regarding the case:

"Quite frankly, I found it mostly interesting in a Jerry Springer kind of way. White trash battling it out in public, throwing chairs at each other. SCO crying about IBM's other women. ... Fairly entertaining".

In an interview on June 23rd, Torvalds responded to SCO's allegation that Linux development had no process for vetting kernel contributions:

"I allege that SCO is full of it, and that the Linux process is already the most transparent process in the whole industry. Let's face it, nobody else even comes close to being as good at showing the evolution and source of every single line of code out there."

Allegations of reverse copying

EWeek 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 licence

Reuters has reported that the SCO Group intends to revoke IBM's licence to use UNIX code in their AIX operating system on Friday, June 13 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, CNET news.com reported that SCO had announced that 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 to not only stop selling and supporting AIX, but to either return to the SCO Group or destroy all copies of the AIX operating system.

Kernel programmer's letter to SCO

On June 15, 2003, The Inquirer reported that an unnamed Linux kernel programmer has written to SCO, threatening action based on their distribution of a Linux distribution that, according to their own claims, contains code not licenced under the GPL. According to the letter reproduced there, the programmer claimed that SCO's doing so was an infringement of his own copyright.

Scheduler code claims

Also on June 15, postings on Slashdot and The Inquirer reported claims that:

  • SCO's claimed copied code was shown without NDA in Germany by mistake
  • the code seen was in the Linux kernel scheduler, one of the most heavily-scrutinized parts of the Linux kernel

Increased damages claims, and read-copy-update claims

As of June 17, 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 have been reported as holding several patents on this technique.

SCO announces that it will not sue its own customers

On June 23, SCO sent out a letter announcing that it would not be suing its own Linux customers. [3]. In the letter, it states:

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.

Some 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.

Free Software Foundation response

On June 25, Eben Moglen, the counsel for the Free Software Foundation, released a fuller statement regarding the SCO lawsuit. In this statement, he reiterates many of the points made above, and states that:

"As to its trade secret claims, which are the only claims actually made in the lawsuit against IBM, there remains the simple fact that SCO has for years distributed copies of the kernel, Linux, as part of GNU/Linux free software systems. [...] There is simply no legal basis on which SCO can claim trade secret liability in others for material it widely and commercially published itself under a license that specifically permitted unrestricted copying and distribution."

SCO to offer a "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, and that doing this may cause SCO to forfeit their rights under the GNU GPL to distribute Linux or Linux-derived code in any form. Many commentators took the view that SCO had no legal basis for this, referring to wording in the GNU GPL that appears to explicitly prevent companies from doing this.

IBM points out SCO's GPL licensing of code

On July 28, it was reported that IBM was briefing its salespeople that SCO's distribution of Linux under the GPL appeared to undermine SCO's case.


An OSDL position paper

On July 31, the Open Source Development Labs released a position paper on the ongoing conflict ([4]), written by the FSF's Eben Moglen ([5]).

On August 4, 2003, it was reported that Red Hat has filed a legal action against SCO ([6], [7]). According to the filing, Red Hat has reqested that the court make:

  • a permanent injunction against SCO's campaign against Linux
  • a number of declaratory judgments
    • that Red Hat has not violated SCO's copyright
    • that Red Hat has not violated SCO's trade secrets rights
    • and several other claims for relief

SCO replied with both a press release and two letters to Red Hat on the same day ([8]); 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:

"Of course, we will prepare our legal response as required by your complaint. Be advised that our response will likely include counterclaims for copyright infringement and conspiracy. I must say that your decision to file legal action does not seem conducive to the long-term survivability of Linux."

The Linux distributor SuSE, a member of the UnitedLinux consortium together with SCO Group, later expressed support for RedHat's initiative, stating in a press release:

"SCO has already been halted in Germany and we applaud Red Hat's actions to help end their activities in the US -- and beyond. We applaud their efforts to restrict the rhetoric of the SCO group -- and the FUD they are trying to instill -- and will determine quickly what actions SuSE can take to support Red Hat in their efforts." [9]

SCO announces licensing fees

One day later, 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 afterwards, while licenses for desktop and embedded systems will currently cost US $199 and US $32, respectively. 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.

IBM counterclaims against SCO

On August 7, IBM filed their counterclaims against SCO. They claim that:

  • SCO cannot claim any rights over Linux, because of their distribution of it under GPL
  • that SCO has interfered in IBM's business
  • that SCO's software violates IBM patents

Documents


Commentaries and Opinions

Interviews

Press coverage

Please see SCO v. IBM Linux lawsuit/Press coverage for an extensive list of links to articles in various publications.

Other Resources


Note: Please note that none of the various claims made has yet been tested in court.

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