Rethinking the IBM/SCO Imbroglio


The threat to open source isn't coming from SCOsource, it's coming from IBM. SCOsource isn't trying to shut down Linux and that demand for licensing fees from users was a just a legal ploy; one more step in an intricate legal dance to which IBM is calling the tune. It's well past time for IBM to act like a grownup and settle this. Whether they do that in court or through negotiations doesn't matter; what matters is reducing uncertainty in the open source community --and if they can't bring themselves to it, perhaps Sun could step in and do it for them.


The story as told by SCOsource is that Caldera decided to look at the 30,000 or so Unix licensees inherited with the Novel deal on Unix as possible sources of renewal revenue and found, among others, IBM and Microsoft. Microsoft promptly renewed, IBM refused and the resulting negotiations quickly stalled.

In response SCOsource asked a Utah court on March 6/03 to enforce its rights and issued a letter to IBM notifying it that its license to use Unix code and derivitives would be lifted on June 13/03; thus effectively prohibiting sales of AIX and all other IBM products containing code covered under the original AT&T agreements as periodically amended.

In response IBM has neither admitted the problem, stopped selling AIX, nor asked a court for an order quashing SCOsource. Instead, they embarked on the discovery process and now show every sign of intending a long legal battle the first part of which will culminate in a trial now scheduled to start in April, 2005.

As a result both sides have gone down the path of repeated filings and counterfilings. In these the Boies law firm representing SCO (apparently on contingency) has, among other things, misrepresented Unix history while IBM has denied everything --even that AT&T invented Unix, that Unix is operating system software, and that Unix is widely used in business:

"1 UNIX is a computer operating system program and related software originally developed by AT&T Bell Laboratories (AT&T). UNIX is widely used in the corporate, or enterprise, computing environment."

Paragraph 1 of the June 16/03 revised SCO complaint

[IBM] "Denies the averments of paragraph 1." Source: IBM's August 6/03 response and counterclaim.

The level of debate in the rest of the Unix community hasn't been much higher with rather a lot of people trying to shout down SCOsource's claims by imputing their motives, misdirecting attention away from the core issue, or drawing improbable conclusions and refuting them in lieu of arguing the facts.

For example, all of the following are common fodder in the opinion and interview sections of various web and press news services:

  1. IBM's licenses covering AIX and derivitive products are irrevocable and perpetual.

    To the extent that IBM has offered any fact based defense it has consisted mainly of the contention that they did nothing they didn't have the right to do.

    SCOsource does not deny that IBM has perpetual and irrevocable rights under the contract, but maintains that IBM allowed actions explicitly prohibited under the terms of that contract, thus setting it aside.

  2. This is a battle over ancient history.

    Consider this quotation from a senior IBM representative as reported by Caroline Humer in the Thursday August 7th Washington Post

    IBM vice president of systems sales Bob Samson said in a memo to customers that "SCO's scheme is an attempt to profit from its limited rights to a very old UNIX operating system by introducing fear, uncertainty and doubt into the marketplace."

    Whether or not SCO's actions constitute "a scheme", what their motivations are, and whether or not SCO is intentionally using FUD are currently arguable issues. In contrast, the allegation that this is about "a very old UNIX" capitalizes on a widespread mis-understanding of the issues and represents FUD slinging at its finest.

    In reality, the AT&T licenses include automatic update provisions under which new code is added to the code base and then covered by the core license terms. It is true that long obsolete enhancements made to Unix when it was first ported to "C" in 1972 and 73 are covered; it's also true that code added by Sun, Motorola, and AT&T to deal with memory management on the PowerPC architecture in the late eighties and early ninties is covered along with more recent work.

  3. This is a copyright issue

    It is not. This is a purely contractual issue. As it turned out SCOsource hadn't quite got its paperwork in order on copyright, but this had nothing to do with the lawsuit which is based entirely on the contract.

  4. SuSe's recent success in getting a German court to order SCOsource to stop saying it's right proves that SCOsource is wrong.

    German courts are not bound by American law and do not enforce American ideas about free speech; commercial or otherwise. Remember too, that the IBM/SuSe partnership is commercially important in a country whose current government was elected largely on an anti-American platform.

    These rulings do signify something important: that litigation like this creates significant legal barriers to adoption of open source software in the United States --barriers that do not apply to American economic competitors in Europe and Asia. i.e. that IBM's inability or unwillingness to settle this dispute quickly and quietly creates a classic non tarrif trade barrier against open source products, thereby protecting Microsoft's US market at the expense of the national economy.

  5. HP's willingness to indemnify its Linux customers shows that their lawyers think there's nothing to the case.

    SCO's complaint isn't against HP (or Linux) it's against IBM. What HP is really promising is to point at IBM on the customer's behalf. That may be a great sales gimmick for HP, but says nothing about the merits of the SCOsource complaint against IBM.

  6. SCOsource is attacking the entire Linux community.

    They are not, Responses from SuSe and Red Hat to the contrary, the SCOsource demand for license fees from Linux users was classic legal fiction. Both key SCOsource executives, McBride and Sontag, have repeatedly said words to the effect that:

    "We're trying to work through issues in such a way that we get justice without putting a hole in the head of the penguin."

    Source: attributed to SCOsource president Daryl McBride in

    Most people find these license claims outrageous, but think about the drivers behind the demand and you may yet see SCOsource as a victim of its own lawyers and the way the courts operate. Fundamentaly, the court will eventually require SCOsource to show a quantitative, market based, derivation for the value of damages claimed. Demanding license fees is one way of establishing that basis -- and one likely to appeal to lawyers acting on contingency because a few successful sales would suffice to establish an enormous fair market value.

  7. The recent shouting match between Messrs. Raymond and Perents on the open source side and McBride on the SCOsource side has something to do with the issue.

    It doesn't. There's lots of sound and fury here but no substance. Peel away the outrage and what Raymond et al are saying is "show us the offending code, and we'll replace it." Great, but the lawsuit isn't about code used in Linux, it's about how that code got there. Peel away McBride's paean to intellectual property rights and all he's really saying is: "don't shoot me, I'm just the messenger."

  8. Caldera's Linux efforts invalidate SCO's claims.

    This argument forms the basis of IBM's "sixth counterclaim" in its August 6/03 filing as well as its more recent argument that SCO's Caldera distribution violated IBM's copyright on some GPL'd code.

    Although a definitive answer will have to await a court judgement, this line of reasoning would seem to be a red herring. Just as one child cannot excuse his cookie stealing by pointing out that the little sister ratting him out ate part of the cookie, so too does it seem unlikely that Caldera's use of, and contributions to, Linux have anything of substance to do with the issue here.

    IBM's most recent claim that SCO over-stepped its rights with respect to IBM contributed Linux code by attempting to extract license fees for it appears to be a similar piece of mis-direction. Here the obvious truth that attempts to extract license fees on third party open source code provided under the GPL violate the GPL gives credibility to an action which really has nothing to do with the fundamental contractal issue.

  9. This is just about whether or not Linux code contributed by IBM in areas such as Sequent's NUMA scheduler or journaled file system is derived from licensed code and therefore covered under the license (meaning that SCO wins) or is independent of it and therefore not covered (meaning that IBM wins).

    This is clearly not correct since SCOsource has already shown code pre-dating the Sequent licenses later taken over by IBM. What's interesting about this, however, is that it looks like a trap for SCO's none too technical lawyers.

    While it seems unlikely that IBM's American management knew anything of the code transfers SCOsource alleges --which I believe took place at at IBM's Bvblingen skunk works in Germany when the Linux to 390 port was done-- letting SCOsource's lawyers lose themselves, and eventually their case, in a morass of legal documentation on a fundamentally unrelated issue seems a perfectly reasonable strategy.

One of the most interesting aspects of case, however, is the intense emotionalism in IBM's denunciation of SCO in its August 6 counterclaim. Here's part of section "E" headed "SCO's Scheme:"

22. SCO devised a scheme to profit from the UNIX rights that it acquired from Original SCO, though UNIX was in no way developed by SCO. Although most, if not all, of the UNIX technology that SCO purports to own is generally known, available without restriction to the general public or readily ascertainable by proper means, SCO undertook to create fear, uncertainty and doubt in the marketplace in regard to SCO's rights in and to that technology.

23. Recognizing that there is little value in its UNIX rights, SCO did not limit its scheme to that technology, rather, SCO devised and executed a plan to create the false perception that SCO holds rights to UNIX that permit it to control not only all UNIX technology, but also Linux -- including those aspects generated through the independent hard work and creativity of thousands of other developers and long distributed by SCO itself under the GPL.

In general, people who point fingers at others point three back at themselves. Here, certainly, the stunning hypocrisy of the accusation that SCO wants to profit from Unix although "Unix was in no way developed by SCO"; the definitive attribution of unknowable motivations; and, the general viciousness of tone do not rebound to IBM's credit.

Dear IBM: Please take two Tylenol and call McBride in the morning

So what can or should IBM do? Remember Johnson and Johnson?

During the early eighties a few bottles of Tylenol on retail shelves in Chicago were contaminated with cyanide and seven people died.

Johnson & Johnson executives reacted by taking personal responsibility and acting immediately and openly to contain risks first by pulling product from the shelves and then by fixing the underlying packaging problem.

This effort cost their company several hundred million dollars, but the results included a fairly quick sales recovery, a sales boost on other products, and hundreds of laudatory case studies citing them for setting the standard in successful crisis management.

The right answer for open source is to get this matter settled. If you believe that no IBM personnel exceeded the scope of the contract, call your friendly local IBM representative and ask that the matter be settled by forcing SCO into court as quickly as possible. If you believe that SCOsource is probably right, then urge that same IBM contact to face facts and get the matter dealt with.

Either way, the right answer is to quit stalling and deal with it.

If not, well Sun may have the perfect solution.

Sun's Unix source licences probably let Sun do whatever it wants with the source. If so they'll be tempted to use this for their own competitive advantage by releasing their own Linux on their own hardware along with a minor cost to the end user and strong legal guarantees on indemnification.

Unfortunately this would create a two tier Linux world and lead to problems getting major applications certified on both "platforms". If, instead, they released Sun Linux to the open source community under the GPL, their action would allow all of the Linux distribution developers to restart from a clean base, thus eliminating the ambiguities created by the SCOsource lawsuit without affecting the merits of its case against IBM.

It seems likely that Sun has the legal right to do this and it certainly has the moral right because most of the code IBM (as differentiated from Sequent and SGI) is accused of leaking is in functions affecting areas such as PowerPC SMP memory management that were first written by, or with the help of, people from Sun, NCR, and Motorola.

An action like this would have three very significant kinds of effect:

  1. It would free the Linux community from most of the FUD currently being generated; remove Microsoft's opportunity to use this FUD against Linux; and, lift much of the threat to open source coming from lawyers seeking new billing opportunities.

  2. It would bring more competition to Linux by making it extremely difficult, if not impossible, for Red Hat to control American Linux while significantly weakening SuSe's competitive position in US and world markets; and,

  3. It would make it easy for everyone involved to see that this is fundamentally a simple contracts dispute between SCOsource and IBM; allow AIX users to fairly assess their exposure; and, allow the rest of us to get on with business.

All of those sound good to me. How about you, Mr. McNealy?