SCO Ruling May Threaten Linuxs Progress in Enterprise

SCO on Thursday managed to get the court to grant it more time for its Unix copyright case against IBM. Analysts worry that the continuing FUD will take its toll on the growing acceptance of Linux in the enterprise.

The shape of The SCO Group Inc.s legal assault on open-source Unix took a slow-motion turn on Thursday, with the court extending the trial date to late 2005. Analysts expressed concerns that the delay could take a toll on the growing acceptance of Linux by enterprise customers.

In what some may consider a good news, bad news situation for The SCO Group Inc., Judge Dale Kimball of the U.S. District Court in Salt Lake City, Utah, granted SCOs request that its Unix-Linux copyright case with IBM be delayed. But at the same time, he refused to let SCO bifurcate the three patent counterclaims made by IBM. SCO wanted to hear the two trials separately.

In its complicated case against IBM, SCO claims that IBM took its Unix intellectual property and improperly placed it in the popular open-source operating system Linux.

IBM maintains that it has done no such thing and that SCO has violated IBMs patents with products such as UnixWare and OpenServer, SCOs versions of Unix for both Intel- and AMD-based computers; SCO Manager, a remote systems-management solution for Linux and SCO Unix systems; and Reliant HA, high-availability, server-clustering software. IBM says that these products violate its patents covering data compression, navigation of graphical menus, a "self-verifying receipt and acceptance system for electronically delivered data objects," as well as monitoring and recovery features in distributed and clustered systems.

According to the new schedule, the case of SCO vs. IBM will now start in November, 2005.

In the text of the judgment, SCO claimed "that IBM has caused delays in discovery thus far, and, consequently, the parties cannot complete the significant amount of remaining discovery by the current deadline of August 4, 2004." When SCO pleaded its case, Brent Hatch, an attorney for the Lindon, Utah-based SCO, said, "The current [trial] schedule is unreasonable."

IBM, on the other hand, argued that the delays in discovery were of SCOs own making, and that August deadline for discovery proceedings could be met. IBM also contends that "SCO seeks to delay resolution of this litigation to serve SCOs improper goal of maintaining fear, uncertainty, and doubt in the marketplace concerning Linux and IBMs (and many others) products."

The decision to grant the delay would come as no surprise to Michael Graham, an intellectual property attorney and partner with Chicago-based law firm Marshall, Gerstein & Borun LLP. At the time SCO asked for a delay, he said, "a request for a delay of up to five months would not be unusual and should not be unanticipated by either SCO or IBM. The patent counterclaims raise new issues, which require entirely different types of discovery and pleading than do the copyright claims."

Still, the judge in his order (PDF Link) made it clear that he doesnt want to see any more delays. "The court will not modify the Scheduling Order again, absent extremely compelling circumstances."

Despite the firm language from the ruling, delays were still likely, advised some legal experts.

"This is the first of what are likely to be many delays in this case," expected Thomas Carey, chairman of the business practice group at Boston-based Bromberg & Sunstein LLP, a firm specializing in intellectual property litigation and business law.

At the same time, Carey observed the second issue with the ruling could prove troublesome for SCO. "The judges refusal to separate out the patent claims hurts SCO because the case will be much more complicated. IBM can afford the millions in legal fees necessary to try the patent claims; SCO will have a hard time funding it."

According to Stacey Quandt, principal analyst at Quandt Analytics, this latest delay, combined with usual lengthy legal process could adversely impact Linuxs enterprise acceptance.

"Even today end-user companies, while adopting Linux, are less likely to talk about their use of Linux. It helps create an atmosphere where its harder for companies to be vocal about their use of Linux. This in turn, means fewer case studies and less discussion of best practices with Linux. All of this hurts Linuxs market acceptance," Quandt said.

The continuing FUD (fear, uncertainty and doubt) about Linux, Quandt said, will help not only companies that compete with Linux, primarily Microsoft, but Linux companies, such as Novell, Hewlett-Packard Co. and Red Hat Inc., that now offer some degree or another of IP indemnification. "It will also benefit companies like Black Duck Software [Inc.] that provide source-code protection."

As for SCO, according to spokesperson, Marc Modersitzki, the company "is looking forward to having the case heard in front of a jury."

Meanwhile, earlier on Thursday, Kimball refused to let SCO move its copyright case with Novell Inc. from a federal court to a Utah state court. Legal experts said this move was widely seen as making it more difficult for SCO to win its copyright case, which, in turn, is essential for SCOs copyright case against IBM.


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