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The SCO-Linux controversies are a series of legal and public disputes between a software company named the SCO Group (SCO) and various Linux vendors and users. SCO has initiated lawsuits that are likely to define the future of both Linux and UNIX. SCO alleges that its intellectual property has been incorporated into Linux without permission. Members of the Linux community disagree with SCO's claims; IBM and Red Hat have counter-sued.
At the beginning of 2003, SCO claimed that there had been "misappropriation of its UNIX System V code into Linux". However, the company refused to identify the specific segments of code, claiming that it was a secret which they would only reveal to the court. They did say that the code could be found in the SMP, RCU and a few other parts of the Linux kernel.
Some industry experts, noting that SCO continues to pay royalties to Novell, believe that any relevant copyrights would be the property of Novell. They also note that the USL v. BSDi case had shown that even those copyrights were weak and unenforceable. SCO has not claimed patent infringement, as all the relevant patents are proven to remain with AT&T and Novell. The UNIX trademark was not owned by SCO. That left trade secrets, which, according to some observers, should be an issue strictly between SCO and IBM and would not affect Linux users, but SCO have since explictily dropped all trade secret claims from the case.
There then ensued a bewildering storm of claims, counter claims, threats, and litigation that involves many of the major names in the computer industry, including IBM, Hewlett-Packard, Microsoft, Novell, Silicon Graphics, Sun Microsystems and Red Hat.
As of mid 2004, five major lawsuits have been filed
- SCO v. IBM
- Red Hat v. SCO
- SCO v. Novell (not directly related to Linux, the suit has more to do with Unix copyrights)
- SCO v. DaimlerChrysler
- SCO v. AutoZone
A great deal of information, documentation and discussion related to the above cases can be found at Groklaw.
Intertwined with these court cases, there have been a number of public statements and assertions made by SCO implying or directly claiming copyright infringement by a number of other parties, including not only Linux developers but also Linux users.
SCO's claims are derived from several contracts that may have transferred UNIX System V Release 4 intellectual property assets. The UNIX IP rights originated with Unix System Laboratories (USL), a division of AT&T. In 1993, USL sold all UNIX rights and assets to Novell, including copyrights, trademarks, and active licensing contracts. Some of these rights and assets, plus additional assets derived from Novell's development work, were then sold to the Santa Cruz Operation in 1995. The Santa Cruz Operation had developed and was selling a PC-based UNIX until 2000, when it then resold its UNIX assets to Caldera, which later changed its name to The SCO Group.
Through this chain of sales, SCO claims to be the "owner of UNIX". The validity of these claims is hotly contested by all parties. SCO claims copyright to all UNIX code developed by USL, referred to as SVRx, and licensing contracts originating with AT&T, saying that these are inherited through the same chain of sales. The primary document SCO presents as evidence of these claims is the "Asset Purchase Agreement", (in the original or transcribed), defining the sale between Novell and the Santa Cruz Operation. SCO says that this includes all copyrights to the UNIX code base and contractual rights to the licensing base. The other parties disagree.
UNIX copyrights ownership
The status of copyrights from USL is murky, since UNIX code is a compilation of elements with different copyright histories. Some code was released without copyright notice before changes in the copyright laws in 1976 made copyright automatic. This code may be in the public domain and not subject to copyright claims. Other code is affected by the USL v. BSDi case, and is covered by the BSD License.
Recently, Groklaw was able to uncover an old settlement made between Unix System Laboratories (USL) and The University of California. The full settlement is available from Groklaw's website . This settlement ended a copyright infringement suit against the University for making BSD source code freely available that USL felt infringed their copyrights. The university filed a countersuit, saying that USL had taken BSD source code and put it in UNIX without properly acknowledging the university's copyright. This settlement muddies the question of SCO's ownership of major parts of the UNIX source code. This uncertainty is particularly significant in regard to SCO's claims against Linux, which uses some BSD code.
Novell challenges SCO's interpretation of the purchase agreement. In response to a letter SCO sent to 1500 companies on May 12, 2003 , Novell exchanged a series of letters with SCO beginning in May 2003, claiming that the copyrights for the core UNIX System V were not included in the asset purchase agreement and are retained by Novell. In October 2003, Novell registered those copyrights with the US Copyright Office.
In response to these challenges from Novell, SCO filed a "Slander of Title" suit against Novell, SCO v. Novell. This claimed that Novell was interfering with their business activities by clouding the ownership of UNIX copyrights. The case was dismissed on June 9, 2004 on a pleading technicality. However, the judge did express doubt that the Asset Purchase Agreement transferred the relevant copyrights.
SCO filed an amended complaint. In late July, 2005, Novell filed an answer to SCO's complaint, denying all of its accusations. Novell also filed its own Slander of Title counter-lawsuit against SCO. Novell has also filed claims for numerous breaches of the APA between Novell and the Santa Cruz Operation. Under the APA, Santa Cruz (and later SCO after SCO purchased Santa Cruz Operation's Unix Business) was given the right to market and sell Unixware as a product, retaining 100% of all revenues. Santa Cruz Operation (and later SCO) also was given the responsibility of administering Unix SVR4 license agreements on behalf of Novell. When money was paid for licensing, SCO was to turn over 100% of the revenue to Novell, and then Novell would return 5% as an Administration Fee. Novell claims that SCO signed Unix SVR4 licensing agreements with Microsoft and Sun Microsystems, as well as with numerous Linux End Users for Unix IP allegedly in the Linux Kernel, and then refused to turn the money over to Novell. Novell is suing for 100% of the revenue, claiming SCO is not entitled to the 5% administration fee since they breached their contract with Novell. Novell's counterclaims proposed asking the court to put appropriate funds from SCO into escrow until the case is resolved, since SCO is diminishing its cash quickly. Since the amount Novell claims it is owed is approximately $25 million, whereas SCO only has $11 million in cash, if Novell prevails on this motion, it could put SCO into bankruptcy.
Novell also retained the right to audit SCO's Unix Licensing Business under the APA. Novell claims that SCO has not turned over vital information about the Microsoft, Sun and Linux End User License Agreements, despite repeated demands by Novell for them to do so. Novell, in another claim that is part of their countersuit, is asking the court to compell SCO to allow Novell to perform this audit of SCO's Unix Business.
License administration standing
The Novell to Santa Cruz Operation Asset Purchase Agreement also involved the administration of some 6000 standing licensing agreements between various UNIX users and the previous owners. These licensees include universities, software corporations and computer hardware companies. SCO's claimed ownership of the licenses has become an issue in three aspects of the SCO-Linux controversies. The first was the cancellation of IBM's license, the second was SCO's complaint against DaimlerChrysler (see SCO v. DaimlerChrysler), and the third is the derivative works claim of the SCO v. IBM case.
In May 2003, SCO cancelled IBM's SVRx license to its version of UNIX, AIX. This was based on SCO's claim of unrestricted ownership of the System V licensing contracts inherited from USL. IBM ignored the license cancellation, claiming that an amendment to the original license made it "irrevocable." In addition, as part of the Purchase Agreement, Novell retained certain rights of control over the administration of the licenses which were sold, including rights to act on SCO's behalf in some cases. Novell exercised one of these rights by revoking SCO's cancellation of the IBM license. SCO disputed the validity of both of these actions, and amended its SCO v. IBM complaint to include copyright infringement, based on IBM's continued sale and use of AIX without a valid SVRx license.
In December 2003, SCO demanded that all UNIX licensees certify some items, some related to the use of Linux, that were not provided for in the license agreement language. Since DaimlerChrysler failed to respond, SCO filed the SCO v. DaimlerChrysler suit in March 2004. All claims related to the certification demands were summarily dismissed by the court.
The third issue based on the UNIX licensees agreement is related to SCO's claims of control of derivative works. This is a major and complex question and is discussed in a separate section below.
Control of derivative works
Many UNIX licensees have added features to the core UNIX SVRx system and those new features contain computer code not in the original SVRx code base. In most cases, software copyright is owned by the person or company that develops the code. SCO, however, claims that the original licensing agreements define this new code as a derivative work. They also claim that they have the right to control and restrict the use and distribution of that new code.
These claims are the basis of SCO v. IBM. SCO's initial complaint, , said that IBM violated the original licensing agreement by not maintaining confidentiality with the new code, developed and copyrighted by IBM, and releasing it to the Linux project.
IBM claims that the license agreement (noted in the $Echo newsletter of April 1985, ) and subsequent licenses defines derivative works as the developer's property. This leaves IBM free to do as it wishes with its new code. In August 2004, IBM filed a motion for partial summary judgment. The motion stated that IBM has the right to do as it wishes with software not part of the original SVRx code. In February 2005, the motion was dismissed as premature, because discovery was not yet complete. IBM is able to refile the motion after discovery is completed.
SCO IP allegedly in Linux
SCO claims that Linux infringes SCO's intellectual property. This claim is fundamental to the SCOsource program, where SCO demands that Linux users obtain licenses from it. Exactly which parts of Linux are involved remains unclear. There are only four kinds of intellectual property; copyrights, patents, trademarks and trade secrets. Patents and trademarks are not involved in SCO's claims against Linux. SCO claimed in SCO v. IBM that IBM had violated trade secrets. But these alleged violations by IBM do not involve Linux distributors or end users. Moreover, the trade secret claims were dropped in SCO's amended complaint, .
This leaves copyrights. SCO claimed line for line literal copying of code from UNIX code files to Linux kernel files, but originally refused to identify which code was in violation. Lately, SCO has offered specific examples.
These examples have fallen into two groups. The first are segments of files or whole files alleged to originate in UNIX SVRx code. The second group are files and materials contributed by IBM that originated with IBM development work associated with AIX and Dynix, IBM's two UNIX products.
Each of these has a different set of issues. In order for copyright to be violated, several conditions must be met. First, the claimant must be able to show that they own the copyrights for the material in question. Second, all or a significant part of the source must be present in the infringing material. There must be enough similarity to show direct copying of material.
SVRx code allegedly in Linux
The issue of ownership of the SVRx code base was discussed above. Besides the unresolved issue of what was actually transferred from Novell to Santa Cruz Operation, there are also the portions of the SVRx code base that are covered by BSD copyrights or that are in the public domain.
SCO's first public disclosure of what they claim is infringing code was at SCOForum in August 2003. The first, known as the Berkeley Packet Filter, was distributed under the BSD License and is freely usable by anyone. The second example was related to memory allocation functions, also released under the BSD License. It is no longer in the Linux code base, .
SCO has also claimed that code related to application programming interfaces was copied from UNIX. However, this code and the underlying standards they describe are in the public domain and are also covered by rights USL sold to The Open Group, . A later claim was made to code segments related to ELF file format standards. This material was developed by the Tool Interface Standard (TIS) Committee and placed in the public domain, . SCO claims that the TIS Committee had no authority to place ELF in the public domain, even though SCO's predecessor in interest was a member of the committee.
SCO has claimed that some are violating UNIX SVRx copyrights by putting UNIX code into Linux. They may or may not have brought this claim directly in any of their cases. The IBM case is about derivative works, not SVRx code (see below). The Novell case is about copyright ownership. DaimlerChrysler was about contractual compliance statements.
The "may or may not" comes from AutoZone's case. In AutoZone, SCO's complaint claimed damages for AutoZone's use of Linux. However, when objecting to AutoZone's request for a stay pending the IBM case, SCO apparently contradicted their written complaint, claiming that the case was entirely about AutoZone copying certain libraries (outside the Linux kernel) from a UNIX system to a Linux-based system to facilitate moving an internal application to the Linux platform faster; SCO's original complaint does not appear to mention these libraries. AutoZone denies having done this with UNIX libraries. If SCO's oral description of their case is the correct one, then their AutoZone claim has nothing to do with the Linux kernel or the actions of any distributors.
The copyright issue is addressed directly in two of the cases. The first is by IBM in their counterclaim in SCO v. IBM. The issue is central to a pending motion by IBM, stating that IBM violated no copyrights in its Linux related activities. It is also addressed by Red Hat in the Red Hat v. SCO case. Red Hat claims that SCO's statements about infringement in Linux are unproven and untrue, damaging to them and violates the Lanham Act. Red Hat asks for an injunction to stop claims of violations without proof. They also ask for a judgment that they violated no SCO copyrights. A hearing on the IBM motion was held in September 15, 2004. Judge Kimball took the motion under advisement. The Red Hat case is on hold.
Allegations of reverse copying
EWeek has reported allegations that SCO may have copied parts of the Linux kernel into SCO UNIX as part of its Linux Kernel Personality feature. SCO has denied these allegations. If true, this would render SCO liable to release the SCO UNIX source under the terms of the GPL, including delivery to existing customers who have, until now, been using SCO UNIX binary packages.
IBM code in Linux
SCO has claimed a number of instances of IBM Linux code as examples of infringement of their IP rights. These examples include code related to Symmetric multiprocessing (SMP), Journaled File System (JFS), Read-copy-update (RCU) and Non-Uniform Memory Access (NUMA). This code is unquestionably in the Linux kernel, and was added by IBM through the normal kernel submission process. This code was developed and copyrighted by IBM. IBM added features to AIX and Dynix.
SCO claims that they have "control rights" to this code, though it isn't exactly clear what sort of right this is. SCO disavows claiming that they own the code IBM wrote, rather comparing their "control rights" to an easement, rights which allow them to prohibit IBM from publicizing the code they wrote, even though IBM owns the copyrights. They base this claim on language in the original license agreement that requires non-disclosure of the code. They also claim that this applies to code developed by UNIX licensees and used with the code under license. This claim is discussed above at Control of derivative works.
SCO and the GPL
Before changing their name to the SCO Group, the company was known as Caldera. Caldera was one of the major distributors of Linux from 1994 to 2003. Some, like Eben Moglen , have suggested that because Caldera distributed the infringing code under the GPL that this act would license any proprietary code in Linux.
SCO has stated that they did not know their own code was in Linux, so releasing it under the GPL does not count. This claim however seems very questionable given that as late as July and August of 2006, long after that claim has been made, they were still distributing allegedly disputed source code under the GPL with apparent full knowledge of the fact  
SCO has also claimed in early stages of the litigation, that the GPL is invalid and non-binding although they have stopped taking that stance after realizing that by their own distribution of Linux code, they are liable for multiple copyright infrigement instances unless they accept and respect the GPL.
The GPL has become an issue in SCO v. IBM. Under U.S. Copyright law, distribution of creative works whose copyright is owned by another party is illegal without permission from the copyright owner, usually in the form of a license; the GPL is such a license, and thus allows distribution, but only under limited conditions. IBM charges that SCO violated IBM's copyrights by distributing a version of Linux while not following the terms of the GPL. Since IBM released the relevant code under the terms of the GPL, it claims that the only permission that SCO has to to copy and distribute IBM's code in Linux is under the terms and conditions of the GPL, one of which requires the distributor to "accept" the GPL. IBM says that SCO violated the GPL via its SCOsource program, by denouncing the GPL's validity, and by claiming that the GPL violates the U.S. Constitution, together with copyright, antitrust and export control laws. Another requirement of the GPL is to require distributions of GPL licensed-works to be free of copyright licensing fees (fees may be charged for the acts of duplication and support). IBM claims SCO also violated the GPL by collecting licensing fees while distributing IBM's copyrighted material that is part of Linux. Many believe that this means that SCO has released and distributed IBM's code without permission, which would be a clear copyright violation.
Status of current lawsuits
On March 7, 2003, SCO filed suit against IBM. Initially this lawsuit was about breach of contract and trade secrets. Later, SCO dropped the trade secrets claim, so the claim is breach of contract. SCO also added a copyright claim related to IBM's continued use of AIX, but not related to Linux. The judge subsequently stated that the SCO group had indeed made a claim of copyright infringement against IBM regarding Linux. IBM filed multiple counter claims, including charges of both patent violations, which were later dropped, and violation of copyright law. Discovery in the case is still underway.
- Viewed against the backdrop of SCO's plethora of public statements concerning IBM's and others' infringement of SCO's purported copyrights to the UNIX software, it is astonishing that SCO has not offered any competent evidence to create a disputed fact regarding whether IBM has infringed SCO's alleged copyrights through IBM's Linux activities. 
On June 28, 2006 Judge Brooke Wells granted, in part, IBM's motion to limit SCO's claims and dismissed 186 of the SCO's 294 claims (IBM had challenged 201 of them for various reasons). Wells cited a number of factors including SCO's inability to provide sufficient specificity in these claims:
- In December 2003, near the beginning of this case, the court ordered SCO to, "identify and state with specificity the source code(s) that SCO is claiming form the basis of their action against IBM." Even if SCO lacked the code behind methods and concepts at this early stage, SCO could have and should have, at least articulated which methods and concepts formed "the basis of their action against IBM." At a minimum, SCO should have identified the code behind their method and concepts in the final submission pursuant to this original order entered in December 2003 and Judge Kimball’s order entered in July 2005. (paragraph 30)
This left about 100 of SCO's claims (the merits of which have not yet been judged), out of 294 claims originally put forth by SCO.
Red Hat filed suit against SCO on August 4, 2003. Red Hat sued SCO for false advertising, deceptive trade practice and asked for a declaratory judgment of noninfringement of any of SCO's copyrights. This case has been stayed pending resolution of the IBM case.
After SCO initiated their Linux campaign, they said that they were the owners of UNIX. Novell claimed these statements were false, and that they still owned the rights in question. After Novell registered the copyrights to some key UNIX products, SCO filed suit against Novell. After the suit was dismissed because it was filed in the wrong court, SCO re-filed their complaint.
On July 29, 2005, Novell filed its answer with the court, denying SCO's claims. Novell also filed counterclaims asking the court to force SCO to turn over the revenues it had received from UNIX licenses, less a 5% administrative fee. Additionally, Novell asked the court to place the funds in a "constructive trust" in order to ensure that SCO could pay Novell since the company's assets were depleting rapidly.
The outcome of the case is still pending.
AutoZone, a corporate user of Linux and former user of SCO OpenServer, was sued by SCO on March 3, 2004. SCO claims AutoZone violated SCO's copyrights by using Linux. This suit has been stayed pending the resolution of the IBM, Red Hat and Novell cases.
In December 2003, SCO demanded that some UNIX licensees certify certain issues regarding their use of Linux. DaimlerChrysler, a former UNIX user and current Linux user, did not respond to this demand. On March 3, 2004 SCO filed suit against DaimlerChrysler for violating their UNIX license agreement by failing to respond to the certification request. Almost every claim SCO made has been ruled against in summary judgment (not dismissed, see the hearing transcript, page 15). The last remaining issue, that of whether DaimlerChrysler made a timely response, was dismissed by agreement of SCO and DaimlerChrysler in December 2004. SCO retains the right to continue this case at a future date, providing it pays legal fees to DaimlerChrysler.
Other issues and conflicts
SCO announces that it will not sue its own customers
- SCO will continue to support our SCO Linux and OpenLinux customers and partners who have previously implemented those products and we will hold them harmless from any SCO intellectual property issues regarding Linux.
Some observers have stated that in doing so, SCO may have granted the same rights to other Linux users who obtained a copy of Linux from any SCO partner under the terms of the GPL. Others have stated that to "hold someone harmless" is different from a grant of rights, and that SCO has not made a grant of rights in writing this letter. Others believe that this letter is moot, as a grant of rights was made by SCO by the act of releasing the software under the GPL in the first place. This action may also signal the grounds for a GPL violation suit against SCO as it is seeking different terms of distribution of works for its own customers than other recipients of the same work.
In August 2003, SCO presented two examples of what they claimed was illegal copying of copyrighted code from UNIX to Linux. One of the examples (Berkeley packet filter) was not related to original UNIX code at all. The other example did, however, seem to originate from the UNIX code and was apparently contributed by a UNIX vendor, Silicon Graphics. However, an analysis by the Linux community later revealed that:
- The code originated from an even older version of UNIX which at some point was published by Caldera (the same Caldera which had later became SCO) thus making any claim of copyright infringement very shaky.
- The code did not do anything. It was in a part of the Linux kernel that was written in anticipation of a Silicon Graphics architecture that was never released.
- It had already been removed from the kernel two months earlier.
- The contested segment was small (80 lines) and fairly trivial.
SCO and Free Software Foundation
In November 2003, Free Software Foundation (FSF) received a subpoena  requiring FSF to produce large quantities of documents for SCO Group. This "fishing expedition" turned up nothing of benefit to SCO, but cost FSF a lot of time.
SCO and BayStar Capital
In October 2003, BayStar Capital and Royal Bank of Canada invested USD$50 million in The SCO Group to support the legal cost of SCO's Linux campaign. Later it was shown that BayStar was referred to SCO by Microsoft, whose proprietary Windows operating system competes with Linux. In 2003, BayStar looked at SCO on the recommendation of Microsoft, according to Lawrence R. Goldfarb, managing partner of BayStar Capital: "It was evident that Microsoft had an agenda".
On April 22, 2004, The New York Times (p.C6) reported that BayStar Capital, a private hedge fund which had arranged for $50M in funding for SCO in October 2003, was asking for its $20M back. The remainder of the $50M was from Royal Bank of Canada. SCO stated in their press release that they believed that BayStar did not have grounds for making this demand. 
SCO and Canopy Group
Until February 2005, Canopy held SCO shares, and the management of SCO held shares of Canopy. The two parties became embroiled in a bitter dispute when the Noorda family sought to oust board member Ralph Yarro III on claims of misappropriation. With internal problems not made public (which included the suicides of an employee and the daughter of Ray Noorda ), the Canopy Group agreed to buy back all the shares that SCO had in Canopy in exchange for their SCO shares and cash.
SCO and the Canopy Group are now completely independent.
Microsoft funding of SCO confirmed
On March 4, 2004, a leaked SCO internal e-mail detailed how Microsoft has paid SCO over $100 million, via the BayStar deal and other means . Blake Stowell of SCO confirmed the memo was real . BayStar claimed the deal was suggested by Microsoft, but that no money for it came directly from them. . In addition to the Baystar involvement, Microsoft paid SCO $6M (USD) in May 2003 for a license to "Unix and Unix-related patents", despite the lack of Unix-related patents owned by SCO. This deal was widely seen in the press as a boost to SCO's finances which would help SCO with its lawsuit against IBM.    
After their initial claim of copyright infringement in the Linux kernel, The SCO Group started their SCOsource initiative which sells licenses of SCO's claimed intellectual property, other than OpenServer and Unixware licenses. After a small number of high profile sales (including one that was denied by the claimed purchaser), SCO claimed to offer corporate users of Linux a license at $699 (USD) per processor running Linux. However, many individuals have found it impossible to buy such a license from SCO. SCO says that participants of the SCOsource initiative are not liable for any claims that SCO makes against Linux users.
The Michael Davidson Email
On July 14, 2005, an email (pdf) was unsealed that had been sent from Michael Davidson to Reg Broughton (both Caldera employees) in 2002, before many of the lawsuits. In it, Davidson reported how the company had hired an outside consultant because "of SCO's executive management refusing to believe that it was possible for Linux and much of the GNU software to have come into existance [sic] without *someone* *somewhere* having copied pieces of proprietary UNIX source code to which SCO owned the copyright. The hope was that we would find a "smoking gun" somwhere [sic] in code that was being used by Red Hat and/or the other Linux companies that would give us some leverage. (There was, at one stage, the idea that we would sell licences to corporate customers who were using Linux as a kind of "insurance policy" in case it turned out that they were using code which infringed on our copyright)."
The consultant was to review the Linux code and compare it to Unix source code, to find possible copyright infringement. Davidson himself said that he had not expected to find anything significant based on his own knowledge of the code and had voiced his opinion that it was "a waste of time". After 4 to 6 months of consultant's work, Davidson says, "we had found absolutely *nothing*. ie no evidence of any copyright infringement whatsoever."
- The SCO Group - Official website
- Free Software Foundation position regarding SCO's attacks 6 essays, by Eben Moglen, Richard Stallman, and Bradley Kuhn
- Groklaw - An online community dedicated to following the progress of the various lawsuits and investigating the claims SCO makes
- Tuxrocks - An archive of court documents related to the various lawsuits
- Open Directory Project: links to articles and websites relating to The SCO Group's lawsuits
- TWikIWeThey - Wiki on SCO v. IBM
- SCO Controversy Timeline
- SCO: Without Fear and Without Research
- Linux's lucky lawsuit - Why the SCO lawsuit is a good thing in the long run
- The Michael Davidson Email
- Novell hits back at SCO in Unix dispute
- Fact and fiction in the Microsoft-SCO relationship