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Novell Offers to Indemnify
Monday, January 12 2004 @ 11:05 PM EST

It's being reported that Novell is adding to the weight of the tsunami headed toward SCO. They too will offer indemnification.

Now Linux enterprise users will be able to pick whatever they like: the OSDL Legal Defense Fund, HP indemnification, Red Hat's legal fund for programmers, IBM's broad shoulders and the freedoms guaranteed and protected by the GPL, or Novell's copyright infringement indemnification.

While indemnification tied to support contracts is not the devil incarnate, this kind of indemnification has some issues. Invariably they tell you what you can and can't do with your code, which is a good way to lose the extraordinary benefits Linux provides over proprietary software. It can lead to the very death of GNU/Linux software development, in my view, because only the largest companies will be able to afford to offer it. Linux isn't primarily developed by such companies.

Now, Novell and HP may not care about that, but I do, because the innovation in free and open source software comes from individuals, not primarily from corporations. Anything that shuts that creativity down is foolish. And there are conceivable conflicts with the GPL, depending on what restrictions a company tries to place on the code in order to indemnify.

The Novell indemnification has another quirk. From what I hear of it, they are offering to cover not just your legal fees but damages up to a certain level. I think there is a real possibility that this would put a bull's eye on your back. Here's why I think so.

One reason SCO's McBride and his chorus continually harp on indemnification, in my view, is because if everyone offered it, they could sue any little old company anywhere and still collect big bucks if they won.

OSDL was careful not to offer to pay off judgments. The beauty of that arrangement is that while SCO would then be faced with highly skilled legal teams against them, they wouldn't be guaranteed much of anything if they won, unless they chose to sue a fairly large company with deep pockets. With Novell's indemnification, it just might tempt them to give it a whirl, because they at least have a shot at a million and a half per victim. Here is what the Wall Street Journal says about the indemnification:

The company plans to provide customers with protection from copyright infringement lawsuits to the tune of $1.5 million, or a factor of 1.25 of their software purchase price.

SCO's legal actions against Unix and Linux are rippling across the industry. But the Novell initiative highlights the response now under way. "It seems like there is a groundswell of support focused on pushing this issue aside," IDC analyst Al Gillen said.

There is a lot pushing against SCO, that is for sure. But what do you have to do to get the indemnification? And what does this offer from Novell tell you they think of SCO's odds? Here's what Novell's Messman says:
"We've got a license to use the Unix technology with our Novell customers," he said. "That license allows us to use any Unix code that might be in Linux--we don't believe there is any--but if there is, we are allowed to use it and we allow our customer to use it."...

SCO had to request what it needed to run its Unix business in order for the copyright transfer to take place, Messman said, "and they did not make a request."

Clearly, Novell feels confident that they own the copyright to Unix and they don't believe there is any infringing code in Linux. A lawsuit from SCO challenging them on copyright ownership or on a contractual issue is very possible, and they know it, and they are forging ahead full steam. Here is what InfoWorld says about the indemnification:
The program will be available free of charge to customers who purchase SuSE Linux Enterprise 8, along with Novell's 'upgrade protection' software maintenance plan and a support contract, from either Novell or a qualified Novell channel partner....

Novell's indemnification would cover SuSE Linux Enterprise on any type of hardware, and would protect customers from legal action by any company, not just SCO.

You don't have to use any particular hardware either. They indemnify enterprise SuSE period. Here's why:
Jack Messman, chief executive of Novell, said in an interview the company is able to indemnify customers because of its history with Unix. Novell sold its Unix Systems Labs unit to a predecessor of SCO in 1995. Messman said Novell retained the copyright to Unix in that deal, a point that SCO disputes. Messman also said Novell has the right, under the contract, to license Unix to its customers for their internal use. "We are in a unique position - nobody else has the copyright or the license," Messman said.
IBM has already put its money on OSDL. Here's their official reaction:
IBM doesn't need to protect its customers against lawsuits because it considers SCO's claims to be baseless, said Mike Fay, a spokesman for the Armonk, New York-based company.

"Our position has not changed and we will continue to fight this in court," he said."

Red Hat will not be hopping on the indemnification bandwagon, and neither will I. I have been talking with some folks and I think there is a better way, a vendor-neutral way, to provide protection without the obnoxious limitations on what you can do with the code that indemnification plans require, which I hope to tell you about soon.

Meanwhile, if you are curious which companies were awarded the most patents this year, here's the list:

1. IBM;
2. Canon;
3. Hitachi;
4. Matsushita Electric;
5. HP;
6. Micron Technology;
7. Intel;
8. Koninklijke Philips Electronics;
9. Samsung;
10. Sony.

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