SCO Considers Linux License Fees

By Peter Galli  |  Posted 2003-07-21

SCO Considers Linux License Fees

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.

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"All they can do is try to get money from Linux users by guaranteeing them that if they pay now, they will be compliant and avoid the headache of litigation down the line," Carey said. "But, given the licensing conditions of the GNU General Public License, which governs Linux and does not allow royalty or license payments, any such move is also likely to be strongly contested."

Blake Stowell, director of communications at SCO, declined to comment on the licensing possibility but confirmed the company had received feedback to the letter it sent warning that Linux is an unauthorized derivative of Unix.

Many CEOs who received the letter asked SCO for guidance on how they could become compliant. "We are in the process right now of considering what they could do to come into compliance," Stowell said. Asked by eWEEK if a fee is a possibility, Stowell said that it "could be."

Bradley Kuhn, executive director of the Free Software Foundation, in Boston, said that any licensing, royalty or other fees charged to Linux users would not be in compliance with the GNU General Public License.

If a company agreed to pay royalties to SCO, the FSF would be hostile to that notion and would probably sue to enjoin it, Carey said. "From a free-software and open-source perspective, what SCO is trying to do looks a lot like extortion because they believe SCO has no rights to the Linux code and may now be preparing to charge people for its use," he said.

Linux users also will not get clarity from the courts soon. SCOs Stowell said the Utah court is not scheduled to hear the companys application for a permanent injunction to stop IBM from shipping AIX until 2005. Carey said this indicates that SCOs strategy is to let "the pot simmer for years and let people get increasingly worried about the legal risk."

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