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SCO CEO Defines, Defends Legal Strategy

By Jay Lyman
Nov 19, 2003 2:40 PM PT

SCO chief executive Darl McBride's explanation and defense of his software company's legal strategy has brought on a flurry of activity in the open-source software community.

SCO CEO Defines, Defends Legal Strategy

Among the more significant developments, SCO indicated it is poised to bring legal action against at least one of the companies that declined its offer to license Linux, which it claims borrows from its proprietary source code thanks to IBM, a defendant in SCO's US$3 billion suit.

Already having agitated its open-source foes to the point that McBride had to be accompanied by security guards when speaking at Comdex, SCO also has attempted to throw a wrench into Novell's acquisition of SuSE Linux, claiming the deal violates a noncompete agreement between Novell and SCO.

SCO, which is being countersued by IBM and Linux distributor Red Hat, also indicated it might expand the list of lawsuits further with a broadened agreement with its law firm, Boies, Schiller & Flexner LLP. SCO said that in addition to the Unix System V code that is the basis for its claims against IBM, it has identified "copyrighted code included in the 1994 settlement between Unix Systems Laboratories and Berkeley Software Design," according to a statement.

License or Litigate

Echoing an earlier statement by the company's high-profile attorney David Boies, McBride said SCO expects to be "in a courtroom setting with at least one customer" within 90 days.

"If they do not want a license or have questions about the strength of our case, we will accommodate them from a litigation perspective if that's the desire," McBride said of the Linux users that passed up SCO's offer.

The company did not name its first target, but SCO spokesperson Marc Modersitzki referred to SCO's expanded relationship with its attorneys and indicated the company in question will be a familiar name.

"We've brought [our legal team] in to now pursue legal action against some major, recognizable Linux users within the next 90 days," Modersitzki told TechNewsWorld.

Elevated Hatred

Aberdeen Group research director Bill Claybrook, who likened SCO's legal setup to "a hired gun to go out and kill people in the Old West," said SCO's latest statements are simply an extension of threats the company already has made.

"Every time SCO elevates this, they become more hated," Claybrook told TechNewsWorld.

The analyst added that he does not see why a Linux user would need a SCO license, calling the idea "nonsense." Claybrook said he believes SCO is trying to get as much investment and money as possible before the IBM lawsuit goes to court, which will not happen for at least 16 months.

"I don't think they think they're going to win this case," he said.

Predictions and Problems

McBride, however, predicted the Utah-based company will prevail in court. In his speech at Comdex, he also made several predictions: Today's General Public License (GPL) for open-source software, such as Linux, will die; Linux will not be free; and Unix software on Intel hardware will be the winning combination of the future.

McBride said his earlier prediction of "a day of reckoning" for Linux has come true in Red Hat's departure from support of free versions of Linux and in Novell's acquisition of SuSE, which was prompted by SuSE's financial failure.

"Now they're going to have to deal with the problem," McBride said of Novell's buy.

Competitive Claws

Regarding Novell's $210 million purchase of SuSE, SCO claimed that "noncompetitive language" within the agreement that ultimately transferred Unix rights from Novell to SCO means a Linux distribution from Novell would be a violation of that agreement.

"When the Novell-SuSE deal is complete, we will take measures," SCO's Modersitzki said.

Novell, which said it has not been contacted by SCO on the matter, responded by calling McBride's and SCO's characterization of the agreements between Novell and SCO "inaccurate."

"There is no noncompete provision in those contracts, and the pending acquisition of SuSE Linux does not violate any agreement between Novell and SCO," said a Novell statement. "Novell understands its rights under the contracts very well, and will respond in due course should SCO choose to formally pursue this issue."

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