The indemnification issue

SCO has, in recent days, made a big issue out of the fact that IBM and Red Hat do not indemnify their customers against any sort of intellectual property infringement committed by use of Linux. This refusal is, it is said, is a clear indication that these companies know they are on thin legal ice. Indemnification is a distraction from the main issue (being that SCO claims its code was stolen and put into Linux), but it deserves a closer look anyway.

A number of articles in the press have portrayed the refusal to indemnify as a strange thing, out of line with usual software industry practice. The authors of those articles clearly have not read the license agreements for the software they used to do their writing. It is a rare product indeed that comes with an indemnity agreement. Consider Sun, for example. This company has made indemnity an issue, but if you go read the Solaris binary code license agreement, you find this text:

(Emphasis added). Sun clearly is not interested in exposing itself to infringement claims. Microsoft's licenses are just as explicit, as are just about everybody else's. In fact, SCO's intellectual property compliance license for Linux contains the following language:

SCO, it seems, is even more explicit than Sun in this regard. When SCO criticises another company for refusing to indemnify its customers, its behavior can only be described as cynical and hypocritical.

So why the big push on indemnification? The issue is clearly a useful distraction from the main issue: SCO's refusal to provide evidence for its claims. There is also a darker possibility, however. Imagine, for a moment (and the following is pure speculation), that SCO's pressure convinces one or more deep-pocketed companies to offer indemnity for its increasingly nervous customers. If SCO were then to put those customers at the top of its lawyers' "to hassle" list, said customers would go immediately to their vendor, asking for relief under the promised indemnity. SCO could then, perhaps, collect a hefty sum from the company involved; said company, under pressure from its customers, may well capitulate in that situation.

In SCO's teleconference this week, CEO Darl McBride said "IBM and Red Hat have painted a Linux liability target on the backs of their customers." (Do remember, hard though it may be, that SCO is not trying to spread fear, uncertainty, and doubt). A real possibility exists that the customers who are targeted first will be those whose vendor has been pushed into offering some sort of indemnity. Linux users may well be better off with the standard "no warranty" language.

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