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SCO: Red Hat throws down the gauntlet

Red Hat has filed a lawsuit against The SCO Group to show that its technologies do not infringe on SCO's intellectual property, and to hold SCO accountable for "unfair and deceptive actions".

The lawsuit is, apparently, timed to coincide with this week's LinuxWorld conference in San Francisco.

The court action is intended to bring facts into the open as a consequence of SCO filing a $1bn lawsuit against IBM in March, alleging that IBM breached a Unix licensing agreement and stole trade secrets.

"For the past two months, we have listened to innuendo and rumour and unfounded claims that have been launched against our customers, in face-to-face meetings with investment analysts [and] in face-to-face meetings with other industry analysts, regarding the unfounded claims associated with Linux and the Linux industry," said Red Hat chairman and chief executive officer Matthew Szulik.

"In a recent conference call, Red Hat was mentioned specifically by name and threats were launched on behalf of the SCO organisation against the entire Linux industry," Szulik added. "We've been patient. We've listened. But when our customers, the whole open-source community and our investors are now threatened with these unfounded claims and innuendo and rumour, it's time to act."

Red Hat sought without success to work with SCO management to resolve the issue and brought the lawsuit to settle the matter quickly.  In its court filings, the Linux supplier claimed that SCO failed to respond to a 18 July request to explain the basis of its claims, "except to make a telephone call seeking to have Red Hat pay for an unneeded Unix licence", Red Hat alleged.

SCO reiterated its claim that Linux is an unauthorised derivative of Unix and denied that it was attempting to spread fear, uncertainty and doubt to end users.

"We're confident of our claims, and we're happy to address any of the allegations that are found in this lawsuit," said SCO spokesman Blake Stowell.

Stowell disputed Red Hat's version of events, saying SCO CEO Darl McBride left the telephone conversation with Szulik thinking he had an agreement to meet and conduct further discussions.

The seven-count complaint asks for a declaratory judgment that no Linux version sold, used or distributed by Red Hat, or used by Red Hat's customers, infringes SCO's intellectual property rights. It also seeks a declaratory judgment that Red Hat's use and sale of Linux and its use by the company's customers does not misappropriate SCO trade secrets.

Other counts allege false advertising in SCO's comments about Linux, deceptive trade practices that are causing "irreparable harm" to Red Hat, unfair competition, interference with prospective business opportunities, trade libel and disparagement of Red Hat's products, services and business practices.

Red Hat is seeking a permanent injunction restraining SCO from acting to cause confusion or make purchasers, business partners and investors believe Red Hat's products violate SCO's intellectual property rights or trade secrets. It also seeks actual damages from SCO's actions in an amount to be established at trial.

Although Red Hat has been unable to quantify the impact of SCO's statements, Szulik claimed customers had delayed purchases.

Red Hat has also established the Open Source Now Fund, which will cover legal expenses associated with infringement claims against companies and developers of open-source software.

The fund covers open-source software generally and not just the Linux operating system, said Red Hat, which pledged $1m to the fund.

However, the fund will not be available to customers. As a matter of policy, Red Hat does not indemnify its customers for legal challenges concerning its software.

Red Hat's lawsuit was precipitated by SCO's decision to move the focus of its complaints from IBM to Linux developers and users, said Sageza Group analyst Charles King.

"Claiming that Linus Torvalds might be personally responsible for some of this, you're starting to get into an area where you're impacting the livelihood and the business of companies like Red Hat and SuSE," he added.

This broadening of its claims may expose SCO to a class action lawsuit on behalf of Linux developers, said open-source advocate Bruce Perens.

"There are tens of thousands of us. We are a viable class for a class action suit," he said, adding that he would consider the rights to the original source code an appropriate damage settlement in such a suit.

"I really like the final irony of SCO having to give up its copyrights, and I think I might pursue it," he added.

Szulik acknowledged to reporters that he takes SCO's challenges personally.

"For me as the CEO of the Linux leader not to take this personally, I would be lying to you if I told you I didn't," he said.

Stephen Lawson and Robert McMillan write for IDG News Service


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