SCO Considers Linux License Fees

By Peter Galli  |  Posted 2003-07-21 Print this article Print

Moves to bring large global enterprise customers into compliance.

The SCO Group is moving to intensify the pressure on IBM and Linux vendors by demanding a royalty fee from businesses for every copy of Linux they use.

SCO, in the middle of a $1 billion-plus lawsuit with IBM, has sent letters to 1,500 of the largest global enterprises, warning them that it believes Linux infringed on SCOs Unix intellectual property rights.

Now SCO is considering asking business users for a fee for every copy of Linux they run distributed by any of the vendors, including Red Hat Inc., SuSE Inc., Debian GNU Linux and Turbolinux Inc., sources said, adding that individual users would likely not have to pay.

The licensing fee would be targeted at all Linux distributions based on the 2.4 kernel; that is where SCO alleges most of the unauthorized Unix code resides. Sources said the price of such a fee or license is expected to be several hundred dollars each.

"SCO CEO Darl McBride is going to take another shot across the bow over the next few weeks," said a senior executive at a major software company. "We know its coming, and theres nothing we can do but wait."

Another source told eWEEK SCO is going to tout the license fee as a way to "legitimize" Linux usage.

Lawyers and others in the open-source community, however, contend the latest SCO move has no merit, is not enforceable and is merely another attempt by the Lindon, Utah, company to boost its revenue and to force a settlement or buyout with IBM.

Since the SCO suit has not yet been heard by the courts, the company cannot legally demand payments from users or vendors, said Tom Carey, intellectual law attorney at the Bromberg & Sunstein LLP law firm, in Boston.

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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