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Software patents in Europe

Europeans, like citizens of much of the "free world," have a certain tendency toward smugness when software patents are discussed. Software patents, after all, are an American problem. Unfortunately, the U.S. is quite good at exporting its problems. Software patents in Europe took another step toward reality this week when the Legal Affairs Committee of the European Parliament voted in favor of an EU-wide software patent scheme. The 20-8 committee vote adopted the proposed directive, as written by the European Commission, almost without changes.

The proposal is said to be more restrictive than the American version of software patents. Patentable technologies would have to be useful in a particular setting and application; simply having a program is not enough. And business models still would not be subject to patents. But the proposed directive is still enough to raise widespread concern throughout Europe. The Greens were quite clear on what they think:

The Legal Affairs Committee of the European Parliament today adopted a report that allows for the unlimited patenting of software which will, in one swoop, entrench the market dominance of multinational companies, force small software firms out of business and bring to an end the European free software movement.

There is also this release from the Foundation for a Free Information Infrastructure, which contains quotes from a number of European business figures.

The sad truth is that software patents have done great harm in the U.S., and they are unlikely to be more beneficial in Europe. This is one import the EU could do without.

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All SCO, all the time

One of these days we'll manage to keep SCO off the front page. Not this week. The next two articles cover a couple of important issues in this whole mess - the breathtaking scope of SCO's claims and a look inside the company as revealed in its latest 10Q filing. Both articles, we think, give some insight into just what the Linux community is up against.

During the last week the read-copy-update (RCU) technology has been singled out as one of IBM's contributions that SCO objects to. We ran an article looking into the origins of RCU and concluding that SCO had nothing to do with the creation of RCU. The article is a bit dated (already) but it still gives an overview of the RCU situation; a number of the reader comments are well worth reading too. In the end, however, origins matter little; SCO believes it owns everything that was ever part of a Unix system.

The company has filed a new version of its complaint against IBM, upping the damages demanded and changing many points. See this LWN article for a brief summary, a pointer to the document, and numerous comments.

Finally, should all this not be enough on SCO, the SCOvsIBM Wiki maintained by Karsten Self is exhaustive and exhausting.

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SCO owns the World?

According to some opponents of free software, users of that software are taking grave risks. The GPL, it is said, is "viral" and can cause the loss of a company's intellectual property. And free software users are exposed to the possibility that somebody, somewhere, may have incorporated tainted code, exposing users and distributors to unexpected liabilities. The solution to these problems, of course, is to simply stick with safe, licensed, proprietary software. It costs, and you sign away a lot of rights, but the warm, fuzzy feeling that comes from signing that license agreement is worth it.

Except it's increasingly clear that things are not that way. We all owe SCO a debt of gratitude for showing us how unsafe proprietary software can be. That company is using proprietary licensing to press a truly staggering set of claims over the work of others and power to disrupt organizations worldwide.

Consider first the issue of intellectual property. SCO CEO Darl McBride recently gave an interview which provided a clear picture of how he sees the ownership of proprietary Unix systems:

Where people get a little confused is when they think of SCO Unix as just the Unix that runs the cash register at McDonalds. We think of this as a tree. We have the tree trunk, with Unix System 5 running right down the middle of the trunk. That is our core ownership position on Unix.

Off the tree trunk, you have a number of branches, and these are the various flavors of Unix. HP-UX, IBM's AIX, Sun Solaris, Fujitsu, NEC--there are a number of flavors out there. SCO has a couple of flavors, too, called OpenServer and UnixWare. But don't confuse the branches with the trunk. The System 5 source code, that is really the area that gives us incredible rights, because it includes the control rights on the derivative works that branch off from that trunk.

These "control rights" are at the core of the IBM lawsuit. SCO is claiming that any work any vendor has ever put into a Unix system is subject to SCO's control. Chris Sontag, the head of SCOsource, is even more direct:

We believe that UNIX System V provided the basic building blocks for all subsequent computer operating systems, and that they all tend to be derived from UNIX System V (and therefore are claimed as SCO's intellectual property).

SCO, it would seem, owns everything. Compared to that claim, the allegedly "viral" nature of the GPL (if you distribute something derived from a GPL-licensed product, the derived product must also be licensed under the GPL) seems weak indeed. SCO is laying claim to decades of work done by dozens of proprietary Unix vendors, and that's just the starting point.

Does this claim have any basis in reality? SCO has posted the relevant agreements on its IBM lawsuit page, so this sort of thing can be checked - at least, for the IBM case. The basic software agreement ("Exhibit A") states (in section 2.01):

Such right to use includes the right to modify such SOFTWARE PRODUCT and to prepare derivative works based on such SOFTWARE PRODUCT, provided the resulting materials are treated hereunder as part of the original SOFTWARE PRODUCT.

Since the agreement on the original "SOFTWARE PRODUCT" includes prohibitions on disclosure, this language would seem to back up SCO's claim. Thus, technologies like read-copy-update, which were never part of any SCO product, could be said to come under this agreement and be prohibited from disclosure. In fact, the language could even be read to transfer ownership of any modifications to SCO, except that IBM caught that and forced a change ("Exhibit C"):

Regarding section 2.01, we agree that modifications and derivative works prepared by or for you are owned by you. However, ownership of any portion or portions of SOFTWARE PRODUCTS included in any such modification or derivative work remains with us.

So IBM owns its changes. But the company might have signed away its right to disclose its changes to others or deploy them in other contexts. Other vendors with less-aware lawyers may well have signed away all ownership to their Unix work. So much for the safety of intellectual property in the proprietary environment.

Of course, all this is IBM's problem. As SCO and others have stated, customers are better off with licensed, proprietary software, since it is warranted against intellectual property problems. Sun Microsystems plans to press this point to its advantage. The only problem is that, once again, SCO has shown us that this statement is not true.

SCO is attempting to revoke IBM's license to distribute AIX. This move does not just affect IBM; consider this quote from Chris Sontag, the head of SCOsource:

SCO said that the termination of the AIX license means that all IBM Unix customers also have no license to use the software. "This termination not only applies to new business by IBM, but also existing copies of AIX that are installed at all customer sites. All of it has to be destroyed," Sontag said.

All of those AIX customers did exactly what they are supposed to do: they signed a proprietary license, paid their fees, and went off with the idea that they had bought the right to use the system on their machines. Now it appears that Unix users, at SCO's whim, can be deprived of the software upon which they have built their businesses. Proprietary Unix, it would seem, is a foundation built upon sand. Given that Microsoft felt the need to buy a Unix license from SCO, it is not clear that Windows users are in any better shape. One might assume that SCO would not try to pull the plug on Windows, but the possibility exists regardless. We look forward to the forthcoming warning from the Gartner Group.

SCO's actions have pointed out the very real possibility for trouble resulting from the incorporation of proprietary code into a free product. This is an issue that should probably be taken more seriously throughout the free software community in the future. But SCO has also made it painfully clear that the proprietary world, too, has its traps, and those traps are at least as frightening as any faced by free software users. Taken to their extreme, the proprietary rights claimed by SCO give that company ownership and control over most computing systems on the planet. It is a frightening thing to contemplate.

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SCO's quarterly report

SCO's Form 10-Q filing, summarizing the company's operations for the quarter ending April 30, is now available. These reports always have some interesting tidbits for those who are patient enough to wade through them, and SCO's is no exception.

SCO claims a profit of $4.5 million for the quarter - the first in the company's history. (Bear in mind that "the company" is the one formerly known as Caldera). Based on that figure, SCO management has made much noise about how strong SCO is. A look at the figures tells a different story.

Products revenue was $11 million - down 12% from one year ago. Services revenue was $2 million, down 30% from one year ago. SCO would have racked up a significant loss in this quarter if it weren't for SCOsource, which brought in $8.3 million. Even after they spent over $2 million in legal expenses and such, that money was enough to put SCO into a position of profit for the quarter. That makes for a nice one-time bottom line, but, as SCO says, "SCOsource licensing revenue is unlikely to produce stable, predictable revenue for the foreseeable future."

SCOsource, so far, has exactly two customers. They won't tell us who the first is, saying only:

The first of these licenses was with a long-time licensee of the UNIX source code which is a major participant in the UNIX industry and was a 'clean-up' license to cover items that were outside the scope of the initial license.

The second licensee, of course, is Microsoft. We don't know how much each one spent, only that the two add up to $8.3 million.

There are hints of some interesting stuff going on with regard to the sale of these licenses. Consider:

During the quarter ended April 30, 2003, the Company issued a warrant to a SCOsource licensee. The warrant allows the licensee to acquire 210,000 shares of the Company's common stock at an exercise price of $1.83 per share for a term of five years from the date of grant. Because the warrant was issued for no consideration to the SCOsource licensee, the Company has recorded the fair value of the warrant of $500,000, as determined using the Black-Scholes option-pricing model, as a warrant outstanding during the quarter ended April 30, 2003 and reduced license revenue accordingly.

Of course, at today's price for SCO stock, that warrant can be exercised (if the holder moves quickly) for a $1.8 million overnight profit. That, one might suppose, will take a bit of the sting out of paying for a license from SCO. The filing does not say which licensee got this little added gift ("for no consideration") or why, but the wording suggests the lucky recipient was the "long-time licensee," not Microsoft.

The story with Vista.com (covered in the June 12 Weekly Edition) gets more interesting as well. There, Vista founder got 800,000 shares (now going on the market) in exchange for a $1 million note payable by Vista. Vista, however, is in default on some of its other loans from SCO - but was given more money in April anyway. There is no real explanation of why SCO is supporting Vista (and its founder) in this way.

SCO claims to have $10 million in the bank, and another $15 million in various assets. $1 million of that is the dubious note from Vista. In the absence of new investments or SCOsource deals, the company may well burn through that cash pile in two years or less. Participants in the recent rally in SCO's stock price may yet find a reason to wish they had missed out.

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Java and Open Source

[This article was contributed by Joe 'Zonker' Brockmeier]

The JavaOne conference was held last week in San Francisco, and as usual there was a barrage of announcements from Sun about new Java-related initiatives and technologies, some of them actually of interest to the Linux and Open Source communities.

One of the big announcements was the launch of Java.net, a cooperative effort with O'Reilly and CollabNet. Java.net seems to be Sun's answer to SourceForge, an Open Source development site but with a specialization in Java and Java-related technologies. The site will include hosting of projects, mailing lists, forums, wikis and blogs (presumably about Java or related technologies). Right now Java.net only boasts a few projects: JXTA, NetBeans, the Javapedia, JAIN and so on.

The NetBeans team announced the NetBeans 3.5 release, including the NetBeans IDE, last week as well. The NetBeans IDE is written, not surprisingly, in Java, so you should be able to run it on Linux or any other platform with decent Java support. However, the NetBeans IDE is not limited to Java development -- it supports C, C++, XML and HTML as well as Java. NetBeans has been available under an Open Source license, the Sun Public License, for three years now.

Sun also announced the Sun ONE Studio 5 IDE, which is based on the NetBeans Platform. This one isn't Open Source, but it does run on Linux and may be of interest to J2SE (Java 2 Standard Edition) and J2EE (Java 2 Enterprise Edition) developers.

Another interesting tidbit announced during the JavaOne timeframe is the Scripting Java Specification Request (JSR), a plan to help scripting languages like PHP and Java interact. Specifically, it's aimed at writing Java classes that can be invoked by a page using PHP, ECMAScript or other scripting languages that are in wide usage. The Scripting JSR seems to be in a formative stage at the moment, but it should be interesting to see what the group comes up with in the long term. The initial members of the group are Sun, Macromedia, Zend and Oracle.

Open Source gamers might be pleased to learn that Sun has diverted work on some gaming APIs from the Java Community Process to Java.net as well. However, this probably has more to do with the fact that Sun doesn't see much profitability in gaming APIs for Java than any major commitment to the Open Source philosophy.

Sun also touted a "simplified" Java Research License (JRL). The JRL is supposed to "simplify and relax" the research section of Sun's Sun Community Source License (SCSL). This allows some limited development for research and development, but anyone hoping to distribute a project will have to go to Sun for a commercial agreement and meet Java compatibility requirements. In other words, it still is not a free license.

What are the prospects of Sun making Java itself Open Source? It's probably not going to happen anytime soon, but there are folks at Sun who'd are in favor of making Java, or parts of it, Open Source. James Gosling, the guy responsible for Java, is in favor of releasing Java according to this Computerworld article:

Oh, yeah. I've always felt that sort of in the abstract, open-source is the right thing to do for a lot of the kinds of things that we do. There are a variety of issues that make it a very complex discussion as to whether it actually works as a business.

Slowly but surely, Sun seems to be moving towards a more open stance with Java, but the company is still retaining very tight control on the core Java technologies.

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