[linux-elitists] OSDL Q&A Addressing recent legal action by SCO Group

David Mohring heretic@ihug.co.nz
Thu Aug 14 11:39:45 PDT 2003

Cut/paste/lynx -dump  http://www.osdl.org/docs/qa_re_sco_vs_ibm.pdf
   OSDN:  Q&A re: SCO vs. IBM 

   [2]Q&A re: SCO vs. IBM

     Q&A  re: SCO vs. IBM by Lawrence Rosen General Counsel, Open Source

     The  following questions and answers were prepared by the author at
     the  request  of the Open Source Development Lab (OSDL) as a result
     of  intellectual property issues arising in the wake of SCO Group's
     lawsuit  against IBM. This position paper is intended by the author
     to calm some of those uncertainties.

     Filed  a  few months ago, SCO s lawsuit against IBM has rankled the
     Linux  community  and  disconcerted its users. Much of the worry is
     caused  by press exaggeration. Not many lawsuits, and certainly not
     this one, deserve to be called the trial of the century.

     SCO  vs.  IBM  should  not  be over-rated. It is a contract dispute
     between  two companies with deep pockets, both of whom are prepared
     to  send  their  attorneys into battle to protect their reputations
     and their economic interests.

     SCO  is  seeking lots of money from IBM and IBM refuses to pay. SCO
     obviously wants to force IBM's hand, and that accounts for at least
     some  of  the tactical moves being undertaken by SCO and its allies
     to  stir  up  fear  among Linux customers. IBM has responded with a
     countersuit,  and  now Red Hat has entered the fray to defend Linux
     and  the  right  of  the  open  source community to distribute that
     operating system to users worldwide.

     The  entire  situation  must  seem  very  murky to those of you not
     following  it  intently.  These  questions and answers may help you
     understand what's happening.

     Q: Is this a lawsuit against Linux?

     A:  No. This is a lawsuit by SCO against IBM, with counterclaims by
     IBM   against   SCO.   SCO  claims  money  damages  for  breach  of
     confidentiality and the disclosure of its Unix-related trade secret
     information  to  the  public.  IBM and SCO had an agreement to work
     together  on IBM's AIX operating system. SCO alleges that, when IBM
     changed  its  business strategy and refocused its efforts on Linux,
     IBM   disclosed  SCO's  confidential  technical  information.  That
     confidential  information,  they  assert,  ultimately found its way
     into Linux.

     IBM  denies all of SCO's material allegations. Recently IBM filed a
     countersuit  against  SCO alleging, among other things, that SCO is
     infringing  some  IBM  patents,  a  move  on  IBM's part to put its
     strategic patent portfolio to defensive use.

     As  this  Q&A paper is written, the SCO vs. IBM litigation is still
     in  its early stages. If this were a typical federal civil lawsuit,
     it  would probably continue for 12-18 months and then settle before
     trial.  But this case is such a public event that it may linger for
     a  while  before  resolving itself at the end with either a defense
     judgment or with money changing hands.

     This  lawsuit,  with  its  claims and counter-claims, is at heart a
     legal  dispute  between  those  two companies over money. The Linux
     operating  system  itself,  and  its contributors, distributors and
     users,  are  not  parties to this litigation and cannot be directly
     affected  by  it. But the indirect effects are being felt. The real
     problem  for  Linux  and open source is not the lawsuit itself, but
     that  the  SCO  vs.  IBM case is creating confusion and doubt among
     Linux users.

     Q: How is Linux involved?

     A:  SCO  claims  that IBM took SCO s confidential information about
     Unix  and the AIX operating system and improperly contributed it to
     Linux.  The  Linux operating system, they assert, was infected with
     SCO's  confidential  information and, because Linux is open source,
     that  confidential information has been disclosed to the world. Now
     that  Linux  is replacing Unix in the operating system marketplace,
     SCO has lost business. It claims over $1 billion in damages.

     Just because two parties enter into a confidentiality agreement and
     exchange  so called confidential information doesn't mean that there
     really  are  trade  secrets  involved.  Sometimes  the  secrets are
     already  out. In most jurisdictions, confidential information loses
     its  trade  secret  status  when  it  becomes  a  matter  of public
     knowledge  through  no  fault of the recipient, or was known to the
     recipient  before  it was disclosed, or was independently developed
     by  the  recipient  without the use of the discloser's confidential

     Unix  operating systems have been in widespread use for many years.
     How  Unix  works  is  not  a trade secret -- it hasn t been a trade
     secret  since  long  before SCO and IBM started to work together on
     AIX.  In  other  words,  there  may  have  been  some trade secrets
     exchanged  between SCO and IBM, but there weren t that many secrets
     left  for  them  to  exchange  that  could relate to Unix and Linux

     Furthermore,  SCO  needs  to  prove  that  those trade secrets were
     actually  copied  into  Linux. Linus Torvalds, working alone in his
     home  in the early days on his Linux program, didn t have access to
     SCO  s trade secrets. Nor did thousands of other programmers around
     the world who have made contributions to Linux software. Their work
     is  original  work  based  on  commonly understood operating system
     principles  and  they  didn  t  need to know SCO s trade secrets to
     write that software.

     But  let's  assume the worst. Suppose the jury, in its wisdom after
     hearing  all  the evidence, concludes that there are a few of SCO s
     trade  secrets  that  ended  up  in Linux. This worst-case-scenario
     exercise  will help us set the outer limits of risk to Linux and to
     its users.

     Not  surprisingly,  given  my  work  with Linux and the open source
     community, I conclude below that the risk is very small indeed. But
     don't  trust  my judgment. I'm not trying to give you legal advice.
     Ask  your  own  attorney  to read these Qs and As and form your own
     judgment based on his or her advice.

     Q: Does SCO have a copyright on Linux?

     A:  Perhaps.  SCO can register a copyright in any software it wrote
     or  modified  or  that  it distributed as a collective work. So can
     Linus  Torvalds,  and  Red  Hat,  and  SuSE, and Debian, and so can
     anyone  (including  IBM) who contributed more than a trivial bit of
     code to Linux. Any of those people or organizations in the U.S. can
     send  $30,  and  a  form,  and 50 pages of their source code to the
     Library of Congress and get a certificate of copyright registration
     suitable   for   framing.   The   procedures   are   described   at
     [3]www.loc.gov/copyright.  There  are  similar  procedures in other

     Registering  a  copyright  is  only  a  ticket  to  get  to  court.
     Registration itself isn t proof of anything important.

     Of  course,  registration  doesn t give SCO ownership rights to the
     original  versions  of  the software it modified or re-distributed.
     Nor  does  SCO  have  any  copyright  ownership in software that is
     independently  written by others, even if that software is based on
     ideas learned from SCO.

     Because copyright law only imperfectly applies to software, SCO has
     an  even bigger hurdle to jump before it can assert its copyrights.
     Here  s  where  the copyright aspects of this case will be a thrill
     for those of us who enjoy puzzles or metaphysics. The parties will,
     through  expert  witnesses,  help  the  court  undertake a somewhat
     mysterious  abstraction,  filtration, comparison test to remove the
     functional  elements  of SCO's copyrighted software and isolate the
     expressive elements. The law says that only the expressive elements
     of  the  software deserve copyright protection. And the doctrine of
     merger   also   applies,   which  denies  copyright  protection  to
     expression necessarily incidental to the idea being expressed. This
     legal analysis will keep the parties busy in court for many months.
     Ultimately,  after  these tests and the merger doctrine are applied
     to  SCO's  software,  far less will be legally copyrightable by SCO
     than  the code they submitted to the Library of Congress along with
     their $30 check.

     And finally, SCO has to prove actual copying or modification of its
     copyrightable  code.  Linux  s  history is not secret. Linux source
     code   is   published  for  all  to  see,  with  copyright  notices
     throughout.  SCO can find who wrote Linux and ask them, under oath,
     to  describe  how they wrote their code. Many Linux programmers are
     already asserting publicly that they implemented their own software
     without  input  from  SCO and that SCO's claims are exaggerated. It
     could take years for SCO to complete the depositions of programmers
     around  the  world  who  contributed  to Linux and, when that s all
     done,  SCO  will  probably not have much copyrightable code left to
     assert against Linux.

     Suppose  though,  after  leaping  those  hurdles,  SCO  manages  to
     convince  the  court  that  IBM  improperly copied or modified some
     portion of SCO s trade secret copyrightable work and contributed it
     to be part of Linux. The Linux development community is prepared to
     address  this  risk  head-on,  if necessary, by re-implementing any
     portion of Linux that was written by SCO.

     SCO  has  refused  so  far  to  reveal  which portions of Linux are
     derived from their software. If they did, the open source community
     would  immediately  start  to  design around those portions. I know
     Linus Torvalds, and I know a fair number of open source programmers
     who  work  on  Linux  worldwide. They are the best operating system
     engineers  available  anywhere.  It  is  a  safe bet that, whatever
     infringing  software  is ultimately found in Linux -- if any at all
     it will be replaced within weeks by non-infringing versions.

     That  s  one  of the strengths of open source software development.
     Like the automatic re-routing that makes the Internet such a robust
     network,  the  open  source  community  can  quickly  route  around
     software  that  doesn't  belong  because  of  third-party copyright

     Q: Can SCO demand license fees to use Linux?

     A:  Sure.  But  just because someone demands money doesn t mean you
     should  pay  them. SCO has sued only IBM, remember, not you, and is
     demanding at least $1 billion in economic damages. IBM didn t reach
     for its checkbook yet. Why should you?

     SCO  already licensed Linux to you royalty-free when it distributed
     Linux  under the GPL license. Although SCO purported to suspend its
     Linux  distribution  after  the  commencement  of this lawsuit, SCO
     continued  to  make  Linux  code  available  for  download from its
     website.  By distributing Linux products under the GPL, SCO agreed,
     among  other  things, not to assert certain proprietary rights such
     as  the  rights  to  collect  license  fees  over  any  source code
     distributed under the terms of the GPL.

     Some  people complain about the absence of indemnity in open source
     licenses,  including  the GPL license used currently for Linux. The
     economic equation is simple: Because the software is given away for
     free, no open source licensor can afford to offer indemnity.

     I  don't  believe indemnity matters anyway in this case, because of
     the way SCO has structured its complaint. Assume, for example, that
     SCO wins its case against IBM and IBM pays $1 billion in damages to
     compensate for the use of SCO s confidential code in Linux. (Again,
     this  is a worst case scenario helpful only to assess risk to Linux
     users.) How then could SCO turn to Linux users and ask for the same
     damages all over again. That double-dipping isn't fair in law or in
     equity. Courts usually don't allow that.

     Simply  by  being  an interested and aggressive defendant with deep
     pockets, IBM is now effectively shielding Linux users from damages,
     even without an indemnity provision in the GPL.

     Q: What is my risk if I continue to use Linux?

     A:  Assume the very worst: Assume SCO wins its case against IBM and
     IBM  writes  a  big  check for damages. Assume SCO proves that some
     portion  of  Linux is a copy or derivative work of its trade secret
     software.  Assume  SCO  gets  an  injunction to prevent anyone from
     using any version of Linux containing infringing code.

     As I previously assured you, long before that happens there will be
     a  new  open  source  version  of  Linux  omitting  any  SCO  code.
     Non-infringing  Linux will be readily available for everyone's free
     use  because  the  open  source  community is entirely committed to

     Whatever  IBM  may  be forced to pay will presumably compensate SCO
     for  its  damages.  It  would be astonishing if, after IBM paid SCO
     some  huge  damage  award,  a court would let SCO go after users as
     well for the same damages.

     For  these  reasons,  the SCO vs. IBM lawsuit is not likely to have
     any  real  impact  on  Linux users. It is a battle of big companies
     that  will  be  resolved in due course by the court, perhaps by the
     payment of money.

     In the meantime, and forever, Linux is available for free.

     Q: What is the effect of the Red Hat lawsuit against SCO?

     A:  Some  of  the  major  players  in  the open source community in
     particular  Red  Hat  have  finally  had enough of SCO's efforts to
     disrupt  the  progress of Linux and to spread fear among its users.
     Red Hat has now sued SCO for unfair business practices.

     The  stakes for SCO are now much higher. It is one thing to start a
     contractual   dispute   with  IBM  and  to  seek  economic  damages
     appropriate  for  the injury supposedly suffered. It is yet another
     thing  to  disparage the reputation of an operating system that was
     independently  designed  and  developed by open source contributors
     worldwide,  and  to  instill  unreasonable  fear in Linux customers
     about the possible consequences of using that operating system.

     The  Red  Hat  lawsuit  is  one of a number of steps being taken by
     leaders  of  the  open source community to respond to SCO's tactics
     against Linux.

     Meanwhile,  development  of  Linux  continues  unaffected.  You may
     continue to use Linux without fear.


     *  Attribution  Notice:  Lawrence  Rosen  is  founding  partner  of
     Rosenlaw  &  Einschlag,  a technology law firm, with offices in Los
     Altos  Hills and Ukiah, California ([4]www.rosenlaw.com). He serves
     also  as  general  counsel  and secretary of Open Source Initiative
     ([5]www.opensource.org),  which  reviews  and  approves open source
     licenses  and  educates  the public about open source issues. While
     this  paper  is written by an attorney, you are not my client and I
     am  not  intending  this  to be legal advice. You are encouraged to
     show   this  article  to  your  attorney  and  obtain  his  or  her
     independent  advice about how to proceed. This paper was written at
     the  request of the Open Source Development Lab (OSDL). The content
     of this paper and the opinions expressed herein are solely those of
     the  author  and  do not necessarily represent those of OSDL or its

     ©  Copyright 2003 Lawrence Rosen. Licensed under the Open Software
     License version 2.0 (available at [6]www.rosenlaw.com/osl2.0.html).


   1. http://www.osdl.org/newsroom/press_releases/2003/2003_08_14_beaverton.html
   2. http://www.osdl.org/docs/qa_re_sco_vs_ibm.pdf
   3. http://www.loc.gov/copyright
   4. http://www.rosenlaw.com/
   5. http://www.opensource.org/
   6. http://www.rosenlaw.com/osl2.0.html

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