Subject: Initial thoughts on IBM-SCO Lawsuit, and Implications for FSBs
From: "Larry M. Augustin" <lma@lmaugustin.com>
Date: Fri, 7 Mar 2003 08:01:27 -0800

 Fri, 7 Mar 2003 08:01:27 -0800
Initial thoughts on the IBM-SCO Lawsuit, and Implications for FSBs

It's still early and we don't yet have a lot of details, but allow me
to begin to speculate on the implications of the SCO-IBM lawsuit for
Free and Open Source Software (FOSS) developers and Free Software
Businesses (FSBs).

At first blush the SCO Group's lawsuit against IBM would seem to cast
a chill on FSBs.  Could they be next?  Most of the initial comments on
Slashdot
(http://slashdot.org/article.pl?sid=03/03/07/0234251&mode=thread&tid=136&tid
=106&tid=123)
assume that the lawsuit focuses on patent infringement claims.  The
original Slashdot posting reads:

    The information is still sparse but the expected lawsuits from SCO
    over Unix/Linux patent infringements has been filed.

If this were true, regardless of the outcome of the lawsuit, it could
cause businesses to reject Free and Open Source Software for fear of
patent infringement lawsuits.  On the positive side, establishment of
some legal precedent around the GPL and patent issues could be
considered a long-term positive.  However, this lawsuit does not
appear to be about patent infringement issues, but rather about
violation of trade secrets, confidentiality agreements, and licensing
terms.

If so, the impact of the lawsuit could be very limited; specifically,
only SCO licensees need worry about being a target of a similar
lawsuit.  Of course, SCO licensees include some of the larger
contributors to FOSS, and that could have a significant impact.
However, non-SCO licensees (e.g. RedHat, SuSE, etc.) seem unlikely to
be targets of this type of lawsuit, whereas they would be likely
targets in a patent infringement lawsuit.

The reasoning that this lawsuit does not involve patent claims comes
from two sources:

    1. An excellent analysis of SCO's patent holdings don by Don Marti.
    2. Careful reading of news articles and Darl McBride's comments.

First, kudos to Don Marti for doing some real research on SCO's patents.
See these URLs:

http://www.ssc.com/pipermail/atc/2003-March/000034.html
http://zgp.org/pipermail/linux-elitists/2003-March/005877.html 

I will quote the core of Don's arguments here:

    Short answer: SCO has no patents.

    It's a little confusing, because there are two companies calling
    themselves "SCO" -- the "old SCO" was Santa Cruz Operation Inc. and
    is now Tarantella.  The "new SCO" is The SCO Group, and used to
    be Caldera.

    > 6,362,836 Universal application server for providing applications
    > on a variety of client devices in a client/server network
    > 
    > 6,104,392 Method of displaying an application on a variety of client
    > devices in a client/server network

    * December 2001: Santa Cruz Operation Inc. changes its name to
    Tarantella Inc. Both of Santa Cruz Operation Inc.'s patents,
    6,104,392 and 6,362,836, stay with Tarantella.

    And also checked on Unix System Laboratories patents that went to
    Novell -- but did not go to the old SCO.

    * November 1995: Unix System Laboratories Inc. assigns three patents
    to Novell: 5,652,854, 5,265,250 and 6,097,384.

    Novell has assigned away only seven patents since 1980, when the
    CASSIS2 records begin: two to Corel, one to Interlogis Inc. and
    three to Volera Inc. 

    Novell never assigned a patent to  either  SCO.

    Caldera (which now calls itself SCO) has never had a patent assigned
    to it.

So SCO has no patents to violate.

Let us now consider what we know about the lawsuit from the articles
at News.com and Forbes.com:

http://news.com.com/2100-1016-991464.html?tag=fd top
http://www.forbes.com/home/2003/03/06/cs qh 0306unix.html

Consider:

	SCO Group filed suit today against IBM for "no less than $1
billion," 
	charging that Big Blue stole trade secrets from SCO to build its 
	presence in the Linux computing business.

No mention of patent or IP violations, but rather stealing of trade secrets.

	The SCO filing, which eWeek predicted in an exclusive report last
	week, said that IBM originally entered into its Unix license
agreement
	with AT&T in February 1985 in order to produce the AIX operating
	system. These agreements require that the Unix software code be held
	in confidence, and bar its unauthorized distribution or transfer.

Again, this sounds like a violation of a confidentiality agreement
claim, but not a patent violation claim.

	But it appears that more legal action could well be on the cards
going
	forward as McBride told eWeek that the unlicensed use of its Unix
	shared libraries was just the "tip of the iceberg as there is so
much
	IP we're dealing with here, ranging from copyright, trade secrets,
	patents, source code and licensing issues."

The only mention of patents, and they are listed in a catch-all manner
along with several other elements.

	McBride said the bottom line was that SCO owned the source code to
	Unix and the right to that operating system. IBM had taken AIX and
	made it available to the Linux community in an unlawful way.

Again, not a patent claim, but a claim that SCO's source code was
released violating the license agreement for that code.

In summary, the key point being IBM had access to SCO's source code as
part of a licensing agreement.  SCO alleges that IBM released
intellectual property (trade secrets and/or copyrighted code) in
violation of that license agreement.

Individual developers and companies that are not SCO licensees would
not appear to be potential targets for this type of lawsuit.

Comments?  Please note, IANAL and my comments are my own.

Larry

--
Larry M. Augustin                       lma@lmaugustin.com
Tel: +1.650.966.1759                    Fax: +1.650.966.1753