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Nice work!

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SCO is running out of room to backpedal.

The only problem with this site is that the more calm truthful arguments you make, the harder it is to take SCO seriously. Soon noone will take SCO's ravings seriously and there will no longer be a need for Groklaw's ingenious SCO commentaries.

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Excellent article. I knew indemnification wasn't needed, but you pointed out aspects that never occurred to me, yet are critically important. Thanks.

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Precisely. Indemnification amounts to an outsourcing of the customer's risk; it is a form of insurance. No company is ever going to write an insurance policy for free. Microsoft is only able to add token indemnification to it's enterprise license agreements because those contracts tend to be so big and their margins are so fat that even something like this amounts to a pittance by comparison. Also, on top of what you've already said, it occurs to me that SCO could be dreaming that -- to the extent that their attempts at expectation managment were to succeed and the corporate world were to say "well, yes, now that you mention it, we really *do* need indemnification from all y'all Linux vendors" -- this could be yet another thing that finally placed a price tag on Linux, at least in the enterprise context. Nice try, I suppose, but I expect that even Dilbert's boss would stand a chance of seeing through that one.

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The thing with insurance coverage is that it comes with conditions. You must use this. You can't use that. These conditions are based on statistics in the form of actuarial tables (for example, people who put safety rails on their stairs cost us less money) and legal opinions involving liability. If any insurance company on the planet thought SCO's position on indemnification was correct, wouldn't that eventually show up as one of the conditions of coverage? If Lloyd's of London thought that using Open Source software was likely to cause financial harm, insurance policies for anything involving Open Source would either be unavailable or more expensive.

I haven't seen that happening. And, of course, we won't see it happen because SCO is full of shit.

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That's my new email signature quote, now and forever more.

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I'm not sure about general insurance but SCO is not threatening enough to be worth swear-words.

They've just followed up their devastatingly ignored announcement that they cancelled the AIX licenses with an even more devastating announcement two months later that they've cancelled the license of a different discontinued product.

They've admitted that they don't want infringing code immediately taken out of linux if any exists.

Their only customer so far (if it exists) insists that it not be named publicly. And it insists that no details can be released that might even give a clue as to its identity.

The argument that they claim will sink the GPL would apply just as well to every single licensing agreement in software history.

Their 80 line code demonstration is now openly being mocked in the mainstream press.

SCO is no longer menacing enough to arouse anger. It's starting to seem like an innoculation to prepare the Linux community to fight the harder software-patent battles to come.

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I was bashed in the previous forum-topic about possible conspiracy with MS, and now I read a (very interesting) new topic supporting that with another fact.

I just wonder if people from ZDNET read these forums or other major descision making institutes (IBM, government). Perhaps not.

Also, if microsoft is backing up SCO as it appears, would that be illegal actually? E.g. in Europe there are some laws that you can only grant an amount of maximum $5000, above that a business transaction would be required.

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Could you explain what you mean by "in Europe there are some laws that you can only grant an amount of maximum $5000, above that a business transaction would be required." I took out my webbrowser to wetten.overheid.nl but didn't find anything like that; found a few other gems though.

Burgerlijk Wetboek Boek 6, Artikel 228:
1. Een overeenkomst die is tot stand gekomen onder invloed van dwaling en bij een juiste voorstelling van zaken niet zou zijn gesloten, is vernietigbaar:
a. indien de dwaling te wijten is aan een inlichting van de wederpartij, tenzij deze mocht aannemen dat de overeenkomst ook zonder deze inlichting zou worden gesloten;
b. indien de wederpartij in verband met hetgeen zij omtrent de dwaling wist of behoorde te weten, de dwalende had behoren in te lichten;
c. indien de wederpartij bij het sluiten van de overeenkomst van dezelfde onjuiste veronderstelling als de dwalende is uitgegaan, tenzij zij ook bij een juiste voorstelling van zaken niet had behoeven te begrijpen dat de dwalende daardoor van het sluiten van de overeenkomst zou worden afgehouden.

An agreement that is reached under misapprehension and which wouldn't be closed under a correct view of affairs is nullifyable:
a. when the misapprehension is caused by statements of the other party [...]
c. when the other party at the closure of the agreement has the same incorrect assumptions [...]

Translation is mine. This remembers be of the story of the little cow, which was sold under misapprehension of being not pregnant. It tells us something about the validity of SCO's "Linux Licence" under Dutch law.

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I would say (based on direct personal experience and involvement in many of them), that there are two aspects to a complex computer system:

1. Whether the system works as specified, or alternatively blows up/trashes your data/etc

There is usually some form of acceptance test for any complicated system, and I assume that would include the kind of systems set up by IBM services' groups.

The customer defines an acceptance test

The supplier tries to build a system which passes the test

The customer tests and doesn't pay all or part until it has passed the test

The acceptance test is sometimes even written explicitly written into the contract. Additionally the customer might want penalty clauses put into the contract if the acceptance test is not passed by date X or Y.

This aspect of "indemnification" is built-in to the purchase process - the supplier doesn't get paid until the system works, and may also be penalized if it takes too long to make it work.

If the acceptance test doesn't match what the customer actually needs - that's nearly always the customers own fault, and they know that. It's a bit like complaining that you got a TV, your acceptance test checked the remote control and NICAM stereo, but you meant to buy a microwave oven - it's own your own stupidity that's the problem. The "indemnification" is a customer is responsible for having their own competent staff and purchase process.

If the acceptance test is passed, when it shouldn't be, again that would probably be an internal problem at the customer. Nothing IBM or anybody else can do, can make the customer do acceptance tests correctly. The "indemnification" is a customer is responsible for having their own competent staff and purchase process.

OR

If buying shrink-wrapped software and putting a system together on top of it, that's the customer's own IT staff's responsibility to choose the correct software. Everybody knows software is, regardless of any legal issues, *effectively* supplied "as is".

If the internal IT staff buy some shrinkwrap software that is unsuitable, that's their fault. That's why they should and do internal testing before rolling out complex systems.

Suing the vendor of the shrinkwrap software is not going to undo the real damage (and you'd probably fail anyway as aside from any legal/contractual issues, its is YOUR fault for spending wads of time & money rolling out the wrong software, when you should have found out earlier). In any case, I expect even if you won, the maximum you'd get is the cost of the shrinkwrap software - all the other damages are likely your fault, what you did after buying, and nothing to do with the vendor... Plus I've never heard of a case of somebody suing their vendor for this type of reason.

AND

2. The new SCO aspect. Some guys sue you for buying something.

IANAL, but nothing can prevent somebody suing you for something. If you do nothing, somebody might even find a reason to sue you for that.

The thing is though

- SCO would be suing you for something that is unproven and heavily contested.

- It is far from clear whether they should be suing you or your supplier

- I've read the argument, from lawyers, they would be suing you for pretty much the same thing they are suing IBM for, i.e. trying to get essentially the same damages twice

- Even without indemnification, if SCO sues you, and if they somehow win, you still could sue your supplier. It would be their (suppliers) fault, not yours.

Lastly, if you are paying for "indemnification" you are paying insurance. Do you really need to pay it? Do you pay insurance for every remote possibility?

McBride, said somewhere (link posted previously), something along the lines of, Linux + fees = Unixware

I think his agenda is clear.

Personally I think it would be safer to keep of his radar screen entirely.

...And if you were still really worried, heck you could use Linux 2.2

On DiDio, I agree with some of the comments posted. Do YankeeGroup indemnify their customers for advice that later turns out to be bad? Aside from the "indemnification" harping, I wonder if she realizes she might be held liable for some of her statements which could be damaging to IBM's or other's businesses. Do YankeeGroup indemnify her?

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Anyone can ask for money, anyone can file some claims in court. Frivolously filing a lawsuit is an unjust act and the defendant can claim his expenses as damages. (Ask your local lawyer for the details, which my vary.)

#!/bin/python
import disclaimer
print disclaimer.ianal

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From SCOs point of view, it all makes sense:

1/ Scare commercial users off Linux so they buy OpenServer/UnixWare instead (in their dreams)

2/ Up the TCO of Linux (indemnity cost or license) so they buy Unix instead

To do this:

3/ (Threaten to) sue the top 1500 companies in the world - they have the money

4a/ Persuade medium/small companies to buy an SCO Linux license, or

4b/ Persuade medium/small companies to get their Linux supplier to indemnify them, then sue the distributer

5/ Ignore individuals. ISTR SCO saying this somewhere. There's no profit going after these guys, they are hard to find, they aren't about to spend USD199/699/1399 to run GNU/Linux at home anyway.

For points 4a/b, they may be hoping that by the next financial statement (10Q?) they will have sold enough licenses so that with a bit more PR and help from uninformed journalists they can start a lemming-like rush for licenses that will help fund their law-suits.

Prediction: Expect lots more FUD about licenses, income and indemnity over the next few weeks (and just ignore it).

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The work we add we warranty, if a third party system, like a Linux component, fails to perform, that is the customer's choice,it isn't within our warranty, but it is in our best interest to handle, which they will usually come to us about. They are not obligated to come to us, they are only obligated NOT to copy the system.

Formally, if the system failed to perform, but passed the FAT, shame on them. It passed the FAT. We will offer to add capability to the system to cover new FAT items, but, when the specification isn't clear the FAT isn't clear either. Those are the customer's job, "tell us what you want, and tell us how to convince you that is what you got", we foten find ourselves helping the cusotmer create the FAT and spec.

Ths is pertanent, becuase SCO somehow is implying they are going to indemnify code they DID NOT WRITE, that came from someone else? Not likely, I dont see SCO doing anything in the way of formal FAT testing, they just seem interested in capturing the revenue stream.

OTOH, I get a lot of extended warranty offers from companies who have just gotten out of the Herbalife business...

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Indeed so, but for instance, MS is so good at introducing new bugs into fixes that any sensible BOfH tests patches before applying them, and that delay may allow their systems to be compromised. The sysadmin gets the blame whatever s/he does. And you must have heard about DLL hell :).

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"The site www.sco.com is running Apache/1.3.14 (Unix) mod_ssl/2.7.1 OpenSSL/0.9.6 PHP/4.3.2-RC on Linux."

Wonder if SCO will go after their own ISP?

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You are confusing two things, twice:

First:

1. Does it work as it says in the box or advertising?

2. Does it do what you think or hope it does? Including *your* interpretation of any advertising, *your* dreams of what you can do with it.

In case 1, it's false advertising if not true. This is where consumer protection might kick in - but even so, do you really expect to get more than the money back?

In case 2, it's your fault, buyer beware.

Admittedly, the two are not always easy to separate.

Second:

1. What a consumer buys off-the-shelf

2. What a business buys under a specific contract

In case 1, we're talking about consumer protection issues. In case 2, we're talking potentially about breach of contract. Again they are different.

The reality is

(a) No non-trivial software is 100%. It is unrealistic to expect otherwise. If you are going to require vendors to promise that, you ain't going to buy anything ever.

(b) Business customers know that, hence acceptance tests, milestones on projects, etc. The "indemnification" against bad systems should be inherent - the business customer shouldn't build his business around a system until he knows it meets his requirements.

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A lot of other articles also state that it is unlikely that SCO could go after the end users because of the way the IP laws are.

PJ do you have any idea about it ("how many times have end users been sued for the use of IP distributed by someone else?")?

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SCO suddenly exlains that Linux users need indemnification. But didn't they recently announce that AIX licensees from IBM no longer have a valid license to use AIX? And suggest that AIX licensees should cease using their "unlicensed AIX", presumably under threat of liability to SCO.

So perhaps SCO should first explain how this indemnification model works for PROPRIETARY Unix software, before they explain how it should work in the open-source Linus world.

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http://arstechni ca.com/wankerdesk/03q2/nigerian-sco.html

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Note that SCO doesn't idemnify you against their losing their suits. If you buy a SCO linux license and then the courts rule that SCO doesn't own any code in Linux, you don't get a refund. In other words, they keep the money whether they owned the code or not. What a scam!

Your point about suing individuals is a good one, but it would still make sense for them to sue corporations that run hundreds or thousands of copies of Linux.

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Unless I'm totally misunderstanding DiDio,

I think the term I would use to describe the time of indemnification that DiDio is talking about (it seems to include any vaguely conceivable risk, depending on her current mood and the phase of the moon), is, "inconceivable".

The software doesn't work in the way that *YOU* want it to (which is not the same as not working in the way the vendor said it would), she seems to think the vendor should indemnify you.

Some open-ended piece of software can be used in a way that infringes somebody's rights - she seems to think the vendor should indemnify you. Does Microsoft (or anybody) else indemnify you that you can't write an Excel macro or extend one of their sample programs in a way that violates somebody's copyright or patent? How could they?

Somebody sues you, for some bizarre reason, DiDio seems to think you should be indemnified against that too?

The whole thing is just so bizarre. Software vendors are only going to be concerned about things they do, not what's in your head/expectation, not what you do with the software, not what some third party might do.

And the bottom line is if the vendor does something stupid, they are probably ALREADY liable to you. If they do something negligent or illegal that damages a customer's business, do you really think those customers are not going to go after the vendor? Okay they might not for some $99 software in Egghead (but the FTC might), but for a big bucks system in the business world, of course they will.

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If you look down the list in SCO Archives, you'll find Claybrook's name and the info you seek.

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I am in no way shape or form taking SCO's position here. But for the record - I have negotiated and signed many corporate software contracts that contain indemnification provisions. These typically read "XYZ Software Inc. represents that it has the right to sell the Product named in the Agreement. Should claims of patent (copyright/etc.) violation be made against the Product, XYZ will indemnify Purchaser ABC for costs of legal representation {insert subrogation clause here}. Should this occur and XYZ be unable to defend the Product, XYZ at its option will provide an equivalent product or refund the purchase price".

That I think is what SCO means by indemnification.

Cranky

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Additionally, maybe I am overinterpreting what has been said, but I get the impression this ain't just about indemnification for IP issues, but some kind of more open-ended warranty is being looked for. In other words, I think we're talking about "IP Indemnification" and more!

In any case, the clause you state, is no real protection for a customer with a big investment:

"Should this occur and XYZ be unable to defend the Product, XYZ at its option will provide an equivalent product or refund the purchase price"

In other words, they give you your money back in the worst case. Your real investment, which goes far beyond the software's price, is not protected. Neither are you guaranteed that the software has a future indefinitely.

Also, without the indemnification clause, are you suggesting the vendor would not be liable for doing something illegal or negligent?

Finally I think the indemnification already exists in a practical sense to some extent:

(a) When has IBM left a customer in the lurch with a strategic product? To my knowledge, it's just not something they *ever* do.

(b) IBM is fighting SCO in court already

(c) If SCO sues an IBM customer, which is more likely, you think: (1) IBM lawyers are just going to ignore it, OR (2) IBM lawyers are going to be raining from the sky ?

PJ:

I couldn't find the link you referred to (yet), but I think you know the one I meant. Here are some other Claybrook links I just found, may previously have been posted:

http://www.newsfactor.com /perl/story/21972.html

http://www.technewswor ld.com/perl/story/31213.html

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The Government can't indemnify you or me against being passed some counterfeit currency or bad checks. They could quite easily print us up some real replacement money under such circumstances. Why not ask the Government to indemnify patent and copyright holders? After all it is the government who is in the business of granting these overly broad property rights for practically nothing in the first place. Ms. DiDio is asking IBM to make a similar offer, even though they don't distribute Linux at all.

Every person on the planet can have as many copies of Linux as they would like. For instance, I have at least three versions of Debian and two versions of Slackware installed to multiple boot on one of my PCs. I also have a PDA and a Sonicblue/Frontpath ProGear Tablet PC that came from different 2.4 kernel trees. A casual user could never accidentally find out that the PDA even runs a copy of Linux. Ms. DiDio can't be serious when she asks anyone to indemnify any and all users against IP infringements on such a global scale. The Debian Project finds restrictions on commercial use unacceptable, but they are not a vendor. How or why does Ms. DiDio think that I should request indemnification from a non-profit organization? It is a mystery to me.

For future reference it's useful to know what IP is actually worth on a per capita basis. The government of Thailand was going to offer laptops with Linux for $400. Microsoft responded by reducing the price of XP and Office to just $36. That also included a localized version of Media Player and IE. The Government of Thailand also asked for MS to remove Product Activation, and they did! http://www.theinquirer.net/?art icle=11058

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Is this what you are looking for?

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http://www.fedbar.org/utah -profile_kimball.pdf

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quatermass: I misunderstood what you are looking for. If I see anything, I will post it as a comment.

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"Darl McBride is a very practical person ...". Uhhh, Ms. Didio, that is germaine to.... WHICH DISCUSSION?

(from the Yankee Group paper) "IBM should indemnify all Linux customers." Uhhh, Ms Didio, IBM does not sell Linux. There are no "IBM Linux customers".

(from the Yankee Group paper) "Losers Novell, IBM". Uhhh .... name-calling in a document that purports to be "professional" ?

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Nothing comes to mind. I've read dozens of accounts and some Q&A with Bill Claybrook. What sort of details are you thinking about? I know that under the terms of the NDA he couldn't name the .c source file but said it came from an Independent Hardware vendor. I also know his opinion of the merits of SCO's claims.

"As for the copyright claims, Claybrook said SCO is pursuing a blackmail tactic and using the lawsuit as a marketing tactic that smacks of blackmail." http://www.newsfactor.com /perl/story/21972.html

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I think that I saw some detail in his Aberdeen Group report on the viewing, but I do not recall where I saw it. Thought it was in the Mozilla quest interview, but that wasn'n it. If I find anything, I will pass it on.

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"Their 80 line code demonstration is now openly being mocked in the mainstream press."

Could you pass on a link or two, I need some comic relief...

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GPL and SCO's legal theory http ://www.cbronline.com/latestnews/7296b8a3327efa0180256d860018c76c

SCO's new web services thing http://www.idg.com .hk/cw/readstory.asp?aid=20030818003

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http://www.vnunet.com/News/1143061

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You've read this. Linked to the Salt Lake City Tribune, a republish of a Wall Street Journal Article.

http://www.slt rib.com/2003/Aug/08122003/business/83192.asp

"Restricted by the agreement in what he can say, Taylor described the infringing code as a trivial 80 or so lines of software (out of a total of 4.6 million in all of Linux!). Despite SCO's frequent insinuations to the contrary, Linux developers take copyright quite seriously."

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I wonder if Darl is nervous of what might happen to the stock, during the hour he'll be speaking this morning and unable to issue an emergency press release.

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Thanks! Had overlooked that one...

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They sure are laying it on thick today, presumably to try and drown out all the bad news. Three of the releases are about the same thing, them rebranding the web services company they bought as SCO's latest inovation.

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plus he says he expects to make "millions and billions" (not an exact quote, but the gist of it) from his web gunk

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"New" products, "Improved" products, "New" alliances, "New" records, Bigger, Better, Faster. Anything to get the name in the press.

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I'm real interested to see what nasdaq says the short interest is this month - when this page eventually updates http://www.nasdaq.com/asp/quotes_ full.asp?mode=&kind=shortint&symbol=SCOX&symbol=&symbol=&symbol=&symbol=&symbol= &symbol=&symbol=&symbol=&symbol=&FormType=&mkttype=&pathname=&page=short&selecte d=SCOX

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A lot of editors just reprint press releases, but with minimal editing - seems like 3 instead of 1 could be counterproductive.

P.S. If anybody has friends at the OpenGroup, do you think they'd be interested in: "The SCO Group (Nasdaq: SCOX - News), the owner of the UNIX operating system," http://biz.yahoo.com/prn ews/030818/lam040_1.html

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Seems that they are aiming the web services PR at different targets. Fairly common tactic to get the widest coverage.

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http://www.eweek.com/ article2/0,3959,1224000,00.asp

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http://www.eweek.com/ article2/0,3959,1224036,00.asp

"The keynote that was to be given by an HP executive is now scheduled to be made by Maggie Alexander, a vice president at SCO partner Progress Software."

Who is Progress Software?

http://linuxtoday.com/d eveloper/2002030101820PRLL

"Since Progress did previously distribute in violation of the GNU GPL and thus did harm MySQL AB and the Free Software community, the FSF expects MySQL to prevail at trial on these claims. The Court recognizes in today's order that MySQL "seems to have the better argument". "

Progress Software is a company that attempted to distribute GPL software without complying with the GPL license, was taken to court and settled before losing.

I hope someone is able to record this "keynote address". It's going to be a riot.

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Thanks for pointing this one out. MySQL v Progress (a case that PJ has mentioned before), is an important one to remember. Specially when some fool claims that the GPL has "never been" tested.

#include <stdio.h>

main (){ printf ("standard disclaimern"); printf ("not a lawyer, not a paralegal, just a codern"); }

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Don't thank me, I couldn't have done it without Darl and his crack PR minions.

I can only guess they would consider having John Gotti speak as an expert on licensing. Don't mind the fact that he was convicted of running extortion rackets and finished his life in prison. Gotti's main theme would be how RICO is a threat to American business and the American way of life.

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Thanks for pointing that link out. Everyone notice the precedent in that pre-trial ruling? Specifically, "...Judge Saris made clear that she sees the GNU GPL to be an enforceable and binding license..."

Ding dong; SCO is dead. =)

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http://www.fsf.org/ philosophy/sco/sco-preemption.html

The SCO Group's recent Anti-GPL "argument is frivolous, by which I mean that it would be a violation of professional obligation for Mr Heise or any other lawyer to submit it to a court."

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LMAO

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I still think that McBride et al have made the money they intended to on the FUD, but selling 50cent shares of SCOX at $10 each. They have no reason to not spend the money on the court cases and drag it out. They already said so much a month is goign to be "automatically" sold, and even if the price crashes they will STILL make out like bandits.

There needs to be SEC action. This is calculated manipulation of the stock, using a worthless lawsuit. I find it funny McB is saying there is going to be 2.5 million lawsuits. That in itself is a laugh riot, at $50 each, if they file small claims themselves, thats $125M in court filing fees, across 50 states. Like I said worthless lawsuit.

The FUD is hurting the open source movement, at least on the business end.

and of course IANAL but I could play one on TV.

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It seems to me, though, that the whole idea of customers' needing indemnification with respect to copyright or patent law for software they buy in good faith is absurd. If ABC Software Widgets sues XYZ Code Company, and the case is not clear enough for a judge to grant a preliminary injunction, customers should be able to continue buying XYZ's product without fear of later being told that they can no longer use it or that they will have to pay extra to keep using it. Conversely, if the case is so cut-and-dried that customers cannot buy from XYZ in good faith, a preliminary injunction should be granted. Without such safeguards, the whole judicial process is short-circuited and prospective customers of a company being sued have no realistic way of knowing where they stand. That's bad for business, bad for the due process of law, and bad for the country.

I would also guess (and this is just a guess, since I have no legal training) that "indemnification" clauses allowing the seller to say, "Stop using our product and we'll refund the purchase price," may actually be worse than useless in some situations if the seller has deep pockets. Suppose XYZ Code Company sells a product for $50 per copy, and ABC Software Widgets sues claiming that XYZ used ABC "intellectual property" worth $100 per copy. With a "stop using that" provision, XYZ can very possibly limit its liability to not much more than the $50 cost of its software. But without such a provision, XYZ could not make its customers stop using the software in order to reduce its liability. Thus, if ABC can get its full damages from XYZ, the "intellectual property" rights are paid for and customers can go on using the product they bought from XYZ instead of having to go looking for (and learn) an alternative.

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