SCO v. IBM: Should we Worry?

By Doug Kaye

From Web Hosting Monthly, January 2004 Edition

January 15, 2003 -- (WEB HOST INDUSTRY REVIEW) -- The tabloids may have Martha, Rosie, Kobe, and Michael to keep their readers' attention, but Darl McBride, president and CEO of the SCO Group, and his lawsuit against IBM over Linux have likewise provided news and entertainment to the IT community. Beyond the theatrics, however, Web hosts are wondering if there is anything to SCO's lawsuit, and how its outcome might affect Web hosting vendors and their customers.

McBride laid out his view of the case in a one-hour presentation at Jupitermedia's cdXpo November 2003 conference, asserting that code SCO licensed to IBM for use in IBM's AIX operating system was inappropriately "contributed" by IBM to the Linux open-source code base. To date, SCO has shown only two examples of such code, and many experts have dismissed this evidence as unsupportive of SCO's position. The court has ordered SCO to produce all of the infringing code, a request that promises an important milestone in this case.

But SCO isn't stopping with just IBM. In addition to the lawsuit, SCO has demanded that everyone who uses Linux pay a license fee of $699 per server. So far there have been few takers, but clearly adding even just a few hundred dollars to the cost of a Linux server would severely impact the economics of Linux Web hosting, particularly the lucrative but aggressively priced dedicated server market.

Is SCO's Case Collapsing?

Many experts think the SCO lawsuit, and perhaps even the company itself, are falling apart. SCO has retained attorney David Boies, the same lawyer that represented Al Gore in Gore v. Bush in front of the US Supreme Court, Napster in RIAA v. Napster, and the US Federal Government in its prosecution of Microsoft. But Boies hasn't appeared on behalf of SCO for many months.

Eben Moglen, general counsel of the Free Software Foundation (FSF), which is responsible for GNU and the GNU Public License (GPL), said, "I do not think Mr. Boies knew what the merits of this lawsuit were when he filed it... I have not seen Mr. Boies touch this lawsuit in some months now. He has not made a public appearance. He has not argued in court on behalf of the client. He has not signed any papers…I know moreover that on the most important court date that this lawsuit has so far had… [The] appearance in the lawsuit was made by McBride's brother Kevin, a practitioner in Utah."

The GPL Challenged

Not one expert seems to believe this case will significantly impact Linux. However, the case has brought into question the legitimacy of the GPL under which Linux is distributed. SCO may be caught in a Catch-22. By demanding that others accept additional license terms, SCO may itself be violating the GPL's provision that the license not be modified. Furthermore, as Moglen says, "How can you maintain a trade secret lawsuit...if you yourself are giving away to everybody under a license that says they can freely copy, modify and distribute it, the very same thing you are claiming is a secret?"

Liability and Indemnification

Most commercial and open-source shrink-wrap licenses don't indemnify you from liability in case the product you've bought is found to infringe on someone else's proprietary rights. Even servers running licensed (and paid for) copies of Microsoft XP, for instance, aren't protected against third-party claims.

Hewlett-Packard announced to its Linux licensees that it will indemnify them against any legal actions by SCO. As Eben Moglen suggests, HP has likely evaluated the cost of such indemnification to be as much as the value of "ice in the wintertime." If there's a legacy to the SCO v. IBM case, it may be that indemnifications become more common in both commercial and open-source software license agreements.

So what's a Web hosting vendor or customer to do? Probably nothing. Even if other Linux distributors don't provide indemnifications, Hewlett-Packard's actions suggest the company's belief that the risk of the GPL licensing of Linux isn't likely to fall apart because of this lawsuit. Yes, you should continue to track the events of SCO v. IBM, and other actions by SCO, but doing so may ultimately be more for entertainment than for any real impact on your business or Web site.