SCO: Make-or-Break Moves?

After months of ratcheting up threats to sue enterprise Linux users, SCO last week filed a pair of lawsuits that legal experts and members of the open-source community said is a make-or-break turning point for the company.

After months of ratcheting up threats to sue enterprise Linux users, The SCO Group last week filed lawsuits against DaimlerChrysler Corp. and AutoZone Inc. in a move that legal experts and members of the open-source community said is a make-or-break turning point for the Lindon, Utah, company.

They question how SCO, which is already engaged in lawsuits against billion-dollar enterprises such as IBM and Novell Inc., will be able to maintain and fund all these legal actions at a time when its revenues and profits are falling.

"You now have a little company suing four immense companies in different places on very different claims and supposing that [SCO] can take all of this on at once," said Eben Moglen, a law professor at New Yorks Columbia University and general counsel for the Free Software Foundation. "My advice to potential and/or existing Linux customers who might be worried about being sued by SCO is that the lesson here is that your greatest danger of that is to be a SCO customer."

"The only thing they have left is literally old contracts with people who have largely already walked away from them," Linus Torvalds, Linux creator and fellow at the Open Source Development Lab, in Beaverton, Ore., told eWEEK in an e-mail exchange. "So they try to milk those connections for all they are worth—and since clearly nobody sane would be interested in renegotiating with them, what have they left?"

The day SCO announced the AutoZone and DaimlerChrysler lawsuits, it released earnings results for its first fiscal quarter, ended Jan. 31. SCO reported a net loss of $2.25 million, compared with a loss of $724,000 a year earlier. Revenue for the quarter also fell, to $11.4 million, from $13.5 million in the same period a year ago.

Officials for AutoZone, of Memphis, Tenn., and DaimlerChrysler, of Stuttgart, Germany, declined to comment, as did IBM and Novell officials, citing the ongoing litigation with SCO.

In the earnings call last week, SCO CEO Darl McBride declined to specify why DaimlerChrysler had been singled out but did say the automaker had not responded to SCOs letter asking Unix licensees to certify their compliance.

In the DaimlerChrysler and AutoZone cases, however, McBride said the companies were "not just two users; theyre at the head of two different classes that are violating our agreements."

McBride also said the legal warpath wouldnt stop in the United States: "Although we started here in the U.S., we do have other initiatives in Europe, as well as Asia."

For its part, the IBM suit moved forward last week when U.S. Magistrate Judge Brooke Wells, in Salt Lake City, ordered SCO to provide "all specific lines of code that IBM is alleged to have contributed to Linux either from AIX or Dynix." The order includes providing specific code from Unix System V that allegedly found its way into AIX or Dynix. IBM was ordered to provide the AIX and Dynix product releases in question. SCO and IBM were ordered to produce all the code within 45 days.

Next page: A complicated legal picture.