SCO Aims Legal Guns At Novell-SUSE Marriage, Big Linux Customer In Near Future
On Tuesday, as part of a conference call outlining a $9 million cash-and-stock fee being paid out to its law firm, SCO CEO Darl McBride confirmed that the Unix company would take Novell to court upon the company's successful acquisition of Linux distributor SUSE. McBride said the legal action is based on a non-compete clause that reportedly prevents Novell from competing in the operating-systems space against Unix.
Novell announced its planned $210 million acquisition of the second-leading Linux distributor last month. The acquisition is pending government approval.
"When SCO bought [Unix System V rights] from Novell, there was non-compete language that would prevent Novell from competing against the core offerings of SCO," McBride said during the conference call. "Linux is a knockoff of Unix. There can't be a more straightforward reading [of the non-compete clause]."
McBride noted that SCO won't retreat from its position unless Novell changes its plans to buy the Linux distribution. "There's nothing [for us] to respond to yet, but when the transaction is complete, they will be violating the non-compete. And if they do what they say they will do--go out and compete [with SCO]--then yes, we will take the appropriate measures to enforce that non-compete."
SCO also plans to file a lawsuit against one large corporate customer using Linux within the next 90 days, McBride said. That is, of course, unless that customer purchases a SCO license, currently priced at $699 per server.
Some observers had predicted that SCO would stay away from litigation involving customers, but it looks like the Unix company doesn't want its threat to be viewed as an empty one.
McBride said it's likely the case will be filed against one of the 1,500 corporate customers who were notified by letter about possible violations last spring, after the company launched its groundbreaking, controversial case against IBM.
"That is an additional aspect of what will be happen, we'll continue to vigorously prosecute," said David Boies, an attorney with Boies, Schiller & Flexner LLP. "You will be seeing in the near term the identification of a significant user that has not paid license fees and is in fact using proprietary copyrighted material. You'll be seeing that in the next 90 days."
SCO did not reveal whether the customer is affiliated with Hewlett-Packard, which extended an indemnification offer to all of its current and future Linux customers who were wary of the intellectual property battle. IBM has thus far refused to make similar offers.
McBride, who claimed the General Public License has exposed Linux customers to copyright litigation, said he doesn't care whether SCO goes after the vendor or customer as long as it gets paid for its intellectual property. And he took the opportunity to pitch a significant cost savings for SCO licenses, at roughly $700 per server, until the end of 2003. After that, the cost will accelerate to about $1,400 per server, he said.
And with a massive $9 million cash infusion into its legal firm, SCO has more than ample resources to ramp up its intellectual property battle beyond IBM, against which SCO filed a $1 billion lawsuit in March.
"I don't know if HP wants customers to send [them] the invoice, and HP will pay on it, or if the Linux end user receives the lawsuit and then [HP] follows up on that," said McBride. "The claims that SCO has are both broad and deep, and [they] touch not just IBM but other vendors, industry consortia and corporations. Out claims are not trivial. The violation of our [intellectual property] is not easily repaired. We are now fully prepared to do that."
When questioned, McBride also dismissed reports that Microsoft was in any way involved in a $50 million investment in SCO last month by BayStar Equity that is being used directly to pay Boise and fund more lawsuits. "We're 100 percent driving our strategy here," McBride said, claiming there is no conspiracy with Microsoft on its legal charge against Linux.
Following the announcement, one developer in the openoffice.org open-source project claimed SCO is attempting to hijack Linux on meritless legal claims that won't stand up in court.
"SCO--and the canopy group behind them--have demonstrated their ignorance of the GPL and software development history as well as their bad faith," said Sam Hiser, a developer at openoffice.org. "Any customer who is even considering paying these extortionary fees is not only doing themselves a disservice, but they are setting back the entire community of software users by enabling SCO to sustain itself in its unethical and fraudulent pursuits."