Report from the SCO front

As a result of Novell's actions, even the most weak-willed corporate officer will have to think twice about buying a "license" from SCO. Said officer may not feel capable of deciding whether SCO's claims have merit, but a disputed copyright is easy to understand. SCO's chances of prevailing on its claims are minimal even in Novell's absence, but Novell's entry into the game makes those claims moot for now. Given that, SCO's lawsuit against Novell is not particularly surprising. It was, instead, inevitable. SCO had to make a show of getting Novell out of its way.

SCO's full complaint is available as an 11-page PDF file. It is, in fact, a relatively straightforward suit, the sort of thing one would expect to see from a company which feels that its copyrights are being stolen in plain sight. It states that Novell has laid claim to the Unix copyrights, that it has made statements with the intent of causing people not to do business with SCO, and has damaged SCO's reputation and business. All of these claims are demonstrably true. Of course, SCO also states that Novell's copyright ownership claims are false, which is not so clear.

SCO is asking the court to find that the copyrights belong to SCO; force Novell to pay actual, special, and punitive damages; issue preliminary and permanent injunctions requiring Novell to assign copyrights and cease claiming to own those copyrights; and to make Novell retract its past claims.

Given that the relevant purchase agreement is available online, one would think that understanding what SCO really bought would not be that hard. In fact, the agreement is written in a sort of obscure legalese that would appear to invite misunderstandings and lawsuits from the beginning. To try to figure out what SCO bought, you have to read through to the very end; the assets to be transferred are listed in schedule 1.1(a):

This paragraph provides a lengthy list of things to be transferred to SCO, but "copyrights" does not appear on that list. So it would be up to a court to decide whether "all rights and ownership" include copyrights or not. SCO claims that the issue was clarified in Amendment 2 to the agreement, which revises Schedule 1.1(b). That section lists the things which were not sold to SCO; the wording was changed to read:

This language suggests that some copyrights would be transferred to SCO, but does not actually list those copyrights in any way. In summary, it is a messy agreement that will require a court to sort out.

The interesting thing is that SCO has not actually asked the court to sort it out. Regardless of what the agreement really says, one thing is strikingly clear: Novell has not actually assigned any copyrights to SCO. Novell might have signed a contract obligating it to assign copyrights to SCO, but SCO agrees that said assignment has not happened. Given that, SCO really needed to file a breach of contract suit to force Novell to live up to (what SCO sees as) its obligations. SCO's lawyers certainly know this; one wonders what they are really trying to accomplish.

More to the point, however, one might well wonder whether the end result of this suit matters to Linux users in the first place. In fact, this action is a significant development in the wider SCO affair. If Novell prevails, SCO's days of threatening Linux users will be done, and that would certainly be a good thing. The IBM case, which has nothing to do with copyrights, might continue, but it would be an isolated contract dispute. All Linux users would have to worry about at that point is what Novell intends to do with its newly-defended copyrights. As we have said before, Novell owes the community a statement regarding its intentions.

If SCO prevails - with an amended complaint bringing up the contract issue, presumably - Linux users would find their position unchanged. SCO would still have to prove that Linux contains its copyrighted code, something it has not done in any convincing way so far. It is increasingly apparent that, in fact, Linux contains no significant amount of copyrighted Unix code. So a Novell defeat would not really set back Linux users in any way.

It seems fairly clear, however, that no court will allow an SCO-initiated copyright suit to proceed until the Novell case is resolved. Until then, SCO's threats against users are even emptier than before.

Meanwhile, SCO has completed a new S-3 filing updating its "risk factors" to include a few marginally relevant items, like Novell's copyright claims. The fact that SCO has known about these claims for several months but only now updated its regulatory filings could come back to haunt it later on. Groklaw has put together a nice table of differences between the old and new filings; it paints a grim picture of where things are going with SCO. Worth a read.

The new S-3 also discusses the strange accounting required by the BayStar investment. For each $1 drop in the company's stock price, SCO must record approximately $1 million in income. Don't be surprised if this phantom income somehow pushes the company into a paper profit in future quarters.

Red Hat has made a fair amount of noise about its new Open Source Assurance Program, which is automatically extended to all Enterprise Linux customers. The program, however, does not offer very much: it states that any code in Red Hat Enterprise Linux which is found to infringe upon intellectual property rights will be replaced. For users who fear, say, a patent problem, this warranty will be a comforting thing to have. It does not go far beyond what the community would do anyway, however.

Finally, it would appear that the SCO Group has sent a letter to the U.S. Congress (available in PDF format) describing the evils of free software. Among other things, it will destroy the U.S. economy and provide vital computing capabilities to America's enemies. And create some business discomfort for the SCO Group, of course. The letter is an impressive bit of work, worth a read. If you are an American citizen, you may want to consider writing a letter yourself to counter SCO's claims. The fact of the matter, however, is that SCO is unlikely to be able to out-lobby companies like IBM and HP.