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A big test for Linux
Will the licensing efforts of a key patent holder derail Linux's corporate growth?
January 28, 2003: 4:11 PM EST
By Eric Hellweg, CNN/Money Contributing Columnist

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SAN FRANCISCO (CNN/Money) - Every so often in the tech world, an intellectual-property lawsuit comes along that gets the coders clucking, predicting that it's the end of the digital world as we know it.

A year ago, it was British Telecom's attempt to collect royalties on hyperlinks. And Amazon now and then comes under fire for some of its business-process patents.

The Linux community, due in part to its freewheeling nature and in part to its public licensing schema, largely has avoided the litigious fray. Until now.

On Jan. 22, open-source software provider SCO Group (formerly Caldera) announced its plans to form a licensing division and hire über-lawyer David Boies "for research and protection of SCO's patents, copyrights and other intellectual property."

The move has met with serious consternation among the Linux and open-source communities. "Does anyone else see this as the end of SCO (Caldera) like I do?" asked one poster on Slashdot, a community website that focuses on the latest news and gossip in tech. "I certainly will never use anything from them ever again."

More than bluster

This kind of typical Slashdot vitriol aside, many open-source observers view this as a turning point in the history of Linux adoption and use.

At issue are the numerous Unix patents owned by SCO. The company sits on some of the patents from the original Unix strains, created in AT&T (T: Research, Estimates)'s Bell Labs from 1969 through the 1980s. Linux is similar in structure to Unix, and it's not uncommon for various Linux strains to borrow a program from here, co-opt some code from there, and so on.

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Most Linux coders wouldn't knowingly build a copyrighted program into their code, but some are unaware -- or choose to be unaware -- of a code's legal lineage. SCO wants to find out who is using its intellectual property in their products and charge them a $149-per-CPU licensing fee, with volume discounts available for large installations.

"People have assumed a lot of this stuff is free," says Chris Sontag, a senior vice president at SCO. "In order to get compatibility with Unix systems on Linux, people grab our [technology] and haven't realized this wasn't appropriate."

Sounds pretty straightforward, but the repercussions from the action could determine the speed with which recent open-source converts such as Dell (DELL: Research, Estimates), Hewlett-Packard (HPQ: Research, Estimates), and IBM (IBM: Research, Estimates) continue developing products for Linux.

Since Linux is developed and shaped by many hands, "there is no assurance -- if it infringes on copyrights -- that it's been cleared and clean-roomed," says Rob Enderle, an analyst with Giga Information Group. "There's a risk that the vetting doesn't get done, because the controls are so loose by nature. SCO's actions could really change things significantly," primarily the confidence large companies feel in offering Linux products.

While it's doubtful that a large company such as HP or Oracle (ORCL: Research, Estimates) would allow copyrighted code to ship without obtaining the proper licenses, this kind of test never before has been performed in the open-source arena. And the question of what does and does not constitute illegal usage of intellectual property is inherently murky.

Typically, when open-source coders encounter a copyrighted program, they'll reverse-engineer it and rewrite the program so as not to use the original code. But in the highly competitive world of intellectual property -- especially under the eagle eye of David Boies -- that might not be sufficient to avoid license payments or litigation.

For SCO, this could be a bet-the-company move. The firm has struggled for the last few years and, with its revenue base shrinking, desperately needs to mine for income every resource in its possession. But many aren't bullish on the move. "SCO didn't have much name-brand recognition as it was," says Dan Kusnetzky, a vice president at IDC. "This will hurt it."

For open-source, this is an even bigger battle. Microsoft could use the copyright confusion to its advantage in its anti-Linux campaign. And companies could decide that it's not worth the potential legal headache to go open-source. Of course, if SCO's efforts are unsuccessful, "it may validate the [Linux] platform as well," Enderle says. "This is the first challenge to Linux, but it won't be the last."


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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.