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Weekly Column

Why Don't You and He Fight?: SCO Seems to Have Lost Its Senses, and I Think Microsoft Is Behind It

Status: [CLOSED]
By Robert X. Cringely

In the last several days, a drama has been playing somewhat in the courts, but mainly in the press. On the stage are three players -- SCO Group, IBM, and Microsoft. In the audience are all the vendors and users of the Linux operating system. SCO is suing IBM for $1 billion, claiming IBM has stolen trade secrets and violated license agreements for the Unix operating system, which is nominally owned by SCO. SCO has warned 1,500 companies that use Linux of the possibility they will be held liable for the theft of SCO intellectual property. And Microsoft has taken a Unix license from SCO, validating the first two concerns. Readers have been asking me what this all means, and I'm here to explain that it is theater, pure theater, and poor SCO is being played for a sucker by Microsoft.

Companies that turn to the courts as SCO has done are either dominant players in their market niche or desperate outfits that feel they have run out of other options. SCO Group appears to be the latter. Formerly called Caldera Systems, SCO was a major Linux vendor in its own right, but that business was recently put aside. Caldera assumed the ownership of Unix from the Canopy Group, which got it from Novell, which bought it from AT&T. While this seems like a complex chain of ownership, the Canopy Group is owned by Novell Founder Ray Noorda, and Canopy was the major investor in Caldera, so these are the same people just wearing different hats.

SCO -- formerly the Santa Cruz Operation -- was bought a couple years ago by Caldera, primarily for its strong reseller network. While SCO didn't own Unix (Caldera did), it had been selling versions of Unix for more than 20 years starting with Xenix, a PC version of Unix that SCO got, ironically, from Microsoft.

First, let's look at SCO's claim against IBM, which is beingpursued by high profile attorney David Boies, trading on his earlier success as the Department of Justice's lawyer against Microsoft and not on his subsequent failure defending Napster. Maybe Boies just feels more confident playing offense. The substance of Boies and SCO's complaint against IBM is that Big Blue licensed Unix for its own AIX product, subsequently made material contributions to Linux development, and lo, there might be some SCO-owned code living inside Linux, so that must be IBM's fault.

I don't buy this argument on either legal or practical grounds.

IBM has made a point not to do anything with the Linux source code. They've taken the role of a Linux reseller and nothing more. It would be very hard to make a case to treat IBM differently than CompUSA or BestBuy. IBM has ported its software to support Linux. IBM has contributed some of its software to the open source community. But you can't be held liable for the guts of Linux if you haven't touched the guts of Linux.

Going even further, IBM awhile back stopped reselling Linux distributions from Red Hat, SuSe, and others. I think there was some internal question whether it was legal for IBM to make a profit reselling Open Source software. (The General Public License specifically allows this, but IBM was being careful.) IBM now requires the customer to buy their own Linux license directly. If you tell IBM you have a Red Hat license, IBM will gladly install Red Hat Linux on your new server for you.

From a practical standpoint, IBM has the world's largest corporate legal department, and more patents than any other company. Right now, I am sure IBM is searching for some patent it owns that SCO is violating, and IBM will find one. Then it won't matter what the real issue is. IBM will grind SCO into the dirt until SCO BEGS for a cross-licensing deal.

It is doubtful that SCO can win the case on its face, and the chances of standing-up against an IBM counter attack are not good. In fact, the best that SCO can probably hope for is an IBM buy-out -- that Big Blue will decide it is cheaper and easier just to buy SCO outright and thereby own both sides of the lawsuit. If SCO is being clever at all, it is in this one area where I suppose they could hope for a higher price as a result of making so much trouble.

Still, the legal path SCO is following is a traditional one for companies in its position. Take on the strongest violator, beat them, and then the other violators will quickly settle. This strategy is made much stronger if another major player can be enticed to settle right away, and that is Microsoft, which just bought a Unix license despite the fact that it doesn't sell Linux or any other Unix variant.

Microsoft is playing the spoiler here, trying to sow fear, uncertainty, and doubt in the community of Linux vendors and users. Microsoft can't beat Linux on price, they can't beat Linux on quality, they generally don't even beat Linux on support, so the cheapest way to compete is to be sneaky. It would not surprise me at all to learn that Microsoft is bankrolling SCO's legal case. I am not saying they are doing so, just that it would not surprise me.

Can SCO really be that stupid? Trying to answer this question, I called Bryan Sparks, who helped found Caldera, the company now called SCO, and was its CEO in the early days. Today, Sparks runs DeviceLogics Inc., a three-person company that sells the DR-DOS operating system and Personal Netware, both acquired from Novell through Canopy.DeviceLogics, like SCO, is based in Lindon, Utah.

"It's a bizarre thing," said Sparks of the week's events concerning his old company. "I don't understand it, nobody understands it. Why have they gone out of their way to tick-off half the world? They've abandoned the Linux market, the Unix market isn't growing, and now they are threatening customers."

Maybe SCO has decided to make its living by defending its intellectual property rather than selling products, I suggested.

"That doesn't make sense, either," said Sparks. "Look at their web site and see all the big companies listed as customers. If they really need to boost revenue they can go back to those customers and offer one-time buy-outs for their licenses. It would hurt the company later, of course, but THAT's when you abandon products and pursue a strictly legal course. I just don't get it."

Meanwhile, Linux vendors are more curious than afraid, SCO's own Linux customers are feeling betrayed, and the 1,500 Linux customers contacted by SCO about potential liability would be wise to wait and see what happens with IBM. If it goes the way I think it will, those customers will have nothing to worry about.

There are no real winners in this story. In the long run, Microsoft can do little to stop Linux in the enterprise. SCO is literally sacrificing itself for what is likely to be nothing. What can Microsoft have promised SCO that would make this course worth taking? Beats me. And if this is part of David Boies's legal strategy, then maybe he didn't learn that much from running the DOJ's case against Microsoft after all.

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