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SCO "Disappointed" by Red Hat Lawsuit
schmidt349 writes "SCO has issued a preliminary response to Red Hat's lawsuit, in which President and CEO Darl McBride advises that SCO will prepare a "legal response" to Red Hat's requests for injunctive relief. In addition, he promises that the countersuit that SCO will file may include "counterclaims for copyright infringement and conspiracy." His final statement-- that Red Hat's "decision to file legal action does not seem conducive to the long-term survivability of Linux--" is chilling in light of the business strategy that SCO has adopted in its sales of UnixWare licenses to actual and potential users of the Linux kernel."
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Secondly, the code was released by SCO under the GPL, negating the claim.
This argument gets thrown around a lot but it can only be correct of SCO knowingly injected the code in question into Linux. However, that's not the argument. Even before SCO started selling distributions, the alleged code existed in the codebase. If this is true, than that code is not legitimately GPL'd.
For example: I write some commercial code. You get the code under a license for internal modification. Later I decided to create a distribution for a cool project on Sourceforge. However, you took some of the code I licensed to you and contributed it to that project without my knowledge. Because you don't have ownership of that code, you do not have the right to GPL it. I distribute that project with no knowledge that my commercial code exists within it. This does not mean that I explicitly GPL'd my commercial code. Therefore, no one with the right to GPL said code GPL'd the code.
Keep in mind that I'm not arguing that SCO's claims are valid, I'm simply pointing out the fallacy in this commonly used argument.
There is no longer anything that can be done with computers that is nontrivial and clearly legal. -- Paul Phillips
SCO has consistently stated that our UNIX System V source code and derivative UNIX code have been misappropriated into Linux 2.4 and 2.5 kernels. We have been showing a portion of this code since early June. SCO has not been trying to spread fear, uncertainty and doubt to end users. We have been educating end users on the risks of running an operating system that is an unauthorized derivative of UNIX. 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 Red Hat's] lack of access to unpublished software patent applications, copyright registrations which fail to adequately disclose source code, and numerous issued software patents that are of dubious validity ... Claims of infringement could require us to seek to obtain
Recent correspondence from SCO to Red Hat further explains SCO's position.
The first letter is from Bob Bench, CFO of The SCO Group, Inc., to Mark Webbink, Sr. Vice President and General Counsel of Red Hat, Inc., that SCO intended to send to Red Hat. After a conversation between Matthew Szulik and Darl McBride, Red Hat determined that SCO did not need to send this letter.
The second letter is one that was sent to Matthew Szulik today from Darl McBride after Red Hat's lawsuit was filed.
July 31, 2003
Mark Webbink, Esq.
Sr. Vice President and General Counsel
RED HAT, INC.
1801 Varsity Drive
Raleigh, NC 27606
VIA FACSIMILE: (919) 754-3700
Dear Mr. Webbink:
This letter is in response to yours of July 18, 2003 to Darl McBride President and CEO of The SCO Group, Inc. ("SCO").
Before responding to your request, it is important to place your letter in context. Your letter follows on the heels of Red Hat's S-3 filing of July 7, 2003, in which your company revised its risk disclosure statement.[1] In addition, SCO is currently engaged in litigation with International Business Machines Corporation ("IBM") regarding its role in the development of the Linux operating system. At the time of your letter, we had expected the possibility of a global resolution of SCO's intellectual property claims against all Linux-related companies that would have likely included Red Hat. This effort has apparently stalled, through no fault of SCO.
Based on the posture of our litigation and your revised risk disclosures, it is unclear to us the purpose of your July 18, 2003 letter. If you desire to enter good faith discussions to address SCO's intellectual property claims against Linux, either on behalf of a wider consortium of Linux companies or solely on behalf of Red Hat, we are willing to meet with you for that purpose. In any such meeting, we will provide example after example of infringement of our intellectual property found in Linux. Of course, any such demonstration must be pursuant to an acceptable confidentiality agreement and must be intended to further good faith discussions about resolving the differences between us.
If you seek information for the purpose of informal discovery intended to benefit IBM in the pending litigation, or for the purpose of devising
your own litigation plans against SCO related to Linux, we must respectfully decline your request. Therefore, please clarify in writing the purpose for your request. Thank you.
Sincerely,
Robert Bench
Chief Financial Officer
The SCO Group, Inc.
[1] Red Hat states in the revised disclosure that it is "vulnerable to claims that [its] products infringe third-party intellectual property rights particularly because [its] products are comprised of distinct software components many of which are developed by independent parties." The revised risk disclosure continues: "[M]uch of the code in [Red Hat's] products is developed by independent parties over whom we exercise no supervision or control
-- Robert Bench, Chief Financial Officer, The SCO Group, Inc.
Take notice, all you that still believe that this is just a simple contract dispute between SCO and IBM. SCO's CFO is clearly stating that they have IP claims against the Linux kernel!
There should be no doubt of their intents after this...
I just visited the German SCO Server (online again, *sig*). Their Newsletter 01/2003 brags about SCO-Linux being ready for enterprise level applications. They state that SCO Linux (distributed under GPL AFAIK) includes code of the "Open Source Community" and the "UnitedLinux LLC, which included and integrated the functionalities critical for professional enterprise deployment" (bad translation by me ;-)).
... back to see if they still have something about this whole mess on their German server. That would cost them a lot of money now.
Then they go on talking about what great stuff there is in this release (see page 2 of the newsletter):
* Kernel 2.4.19, KDE 3 etc
* Improvements in the memory manager for scalability and performance
etc.
I don't believe they did not know what they were distributing if they advertise with this stuff.
OK
Why doesn't RedHat just buy them?
People keep asking this question, so it seems like it deserves a "OK, once and for all, this is why" answer.
Your question is based on the (common) misconception that all of a company's shares (or even a majority of them) are necessarily publicly traded. A company, when it "goes public," may make 95% of all its shares available to the public, or it may make only 5% of those shares public.
If the case is the latter, you could go to the NYSE or NASDAQ and buy every share there that someone is selling, and you would still only own 5% of the company. Ownership percentage = the percentage of votes you can cast on shareholder questions like kicking out the board of directors, etc.
I don't have figures, but I believe that SCO is more than 51% privately held. So buying all the publicly traded shares of SCO still isn't going to let you dictate the course of the company, it would just give you a bunch of (hopefully soon worthless) shares. The only way to gain control of the company would be to buy out the private owners ... who, I'm guessing, will make that price VERY steep if they think they have any chance at winning.
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