The video is here if you wish to follow along.

What stands out from the legal perspective is what he lets slip about being in competition with Red Hat, expecting that the result of the lawsuits will be that SCO will pass Red Hat once again. They argued strongly in their reply to Red Hat's complaint that they were not competitors, that Red Hat had no standing, wasn't involved with the kernel, just wasn't affected by the SCO challenge in any relevant way. Yet here, McBride says:

If you remember SCO back in the eighties, nineties, was the leading brand for UNIX on Intel. If you think about it in a horse-race metaphor, the UNIX on Intel race was going, SCO was way out ahead. As you head into early 2000s, all of a sudden SCO comes back to the pack and Red Hat shoots past it. OK? And now we are back on our horse and gaining ground again in some major, albeit probably small compared to Red Hat, but at the end of the day, that is the race. Now the question that it is going to come down to you is, we get through the court system and get our claims heard and the jury comes back with the verdict we expect to get, then you're going to see it come back in the other way. We're going to catch up and pass Red Hat again.

If I were analyzing this for an attorney, that's where the stickie note would go. They are suing end users so that Red Hat's business will be reduced in favor of SCO, and Red Hat has no standing to bring Lanham Act claims?

Here's what their lawyers argued:

Contrary to the assertions in Red Hat's answer brief, it has not stated (and cannot state) a prima facie case under the Third Circuit's Lanham Act test because of one incontrovertible fact -- Red Hat has no ownership or proprietary interest in the Linux 2.4 and 2.5 kernels that are the subject of SCO's lawsuit against IBM -- indeed no one has such an interest.. . .

Red Hat's alleged interest in the Linux 2.4 and 2.5 kernels is too indirect, too remote, and too disconnected from any ownership or proprietary control to show a sufficient economic interest in the 'product' under the Lanham Act. . . .

Stansfield v. Osborne Industries, Inc., 52 F3d 867, 873 (10th Cir. 1995) (standing for false advertising claim requires plaintiff to be a competitor and allege a competitive injury; with the freely distributed Linux kernels, Red Hat is not a competitor, cannot allege competitive injury and has no standing).

The other thing that stands out is where he asks the audience to do a search on Google and find "independent" attorneys attacking the GPL. Those independent attorneys, whoever they are, aren't "independent" like the "independent" ha ha analysts on Microsoft's "We're cheaper than Linux" web page, are they?

Finally, this interview makes clear that they have based their attack on the GPL on a misreading of its terms. The GPL does not forbid making money from software. In fact it encourages it. His slur that the goal is zero price is either a gross misunderstanding or a cynical way to cause a lot of time-consuming trouble and FUD about the GPL. Take your pick. Here is what the GPL FAQ says about that very question, and now that Mr. McBride has told the world he reads Groklaw, he can not plead ignorance from this day forward on this point:

Does the GPL allow me to sell copies of the program for money?

Yes, the GPL allows everyone to do this. The right to sell copies is part of the definition of free software. Except in one special situation, there is no limit on what price you can charge. (The one exception is the required written offer to provide source code that must accompany binary-only release.)

Does the GPL allow me to charge a fee for downloading the program from my site?

Yes. You can charge any fee you wish for distributing a copy of the program. If you distribute binaries by download, you must provide "equivalent access" to download the source--therefore, the fee to download source may not be greater than the fee to download the binary.

And while we have his attention, allow me to draw attention to this question and answer:

Who has the power to enforce the GPL?

Since the GPL is a copyright license, the copyright holders of the software are the ones who have the power to enforce the GPL. If you see a violation of the GPL, you should inform the developers of the GPL-covered software involved. They either are the copyright holders, or are connected with the copyright holders.

They might like to inform their lawyers about that, since their most recent legal document filed in the IBM case shows a lack of deep understanding of this point.

We have tried to be accurate, and any mistakes are ours, not those of Mr. Farber, ZDNet, or the Sand Hill Group. If you see any errors, do tell us, so we can perfect the transcript. That would be errors in transcribing, as we are not responsible for any errors on Mr. McBride's part. I have already denied his false charge that IBM sponsors Groklaw. It does not. I await his public apology, naturally.

***********************************************

Dan Farber (DF): You have an announcement today that you've signed up a licensee called EV1Servers.net.

McBride: Right.

DF: And I was talking to the CEO of the company backstage, and he said the reason that he signed up for this was because he felt like he got an insurance policy.

McBride: Right.

DF: So why would anyone need an insurance policy?

McBride: Well, I think you start with, I mean, to make sure we're on the same page here to start off the discussion, SCO owns the UNIX operating system. We have claims out there that our code is showing up in Linux, and we are in the process of working our way through the court system there. In certain cases, we've actually had Linux community members come back and say, There is code in there. It wasn't supposed to be there. We took it out. So by definition, there is some level of tainting already going on with Linux.

DF: But how much code are we talking about? I have seen the numbers that say 20 percent of the code of Linux...

McBride: Right.

DF: ...is owned by SCO. On the other hand, what we've heard is that some of the code -- actually most of the code -- actually comes from IBM and wasn't part of UNIX System V, and that the code that's been taken out is a few hundred lines at most.

McBride: I think the part the people have said that they have taken out definitely categorizes as the couple of hundred lines, but it definitely creates a situation where there is code in there that wasn't supposed to be there. There is a few million servers around the world. EV1 today took down a license. They don't need to worry about the next year, eighteen months, what's going to happen through the rest of this battle. See, what's going to happen they're s... their customers are now safe. In the case of the derivative works, we are not claiming to own IBM's derivative works. We claim to have a title ownership. It's a little bit like if you have a property and then running through the back, you have a utility easement. Our claim is around the utility easement, not on the whole property.

DF: Well, I've heard it described differently. It's like if I wrote a song for a movie.

McBride: Right.

DF: And that the movie company would then claim ownership of that song and therefore as a derivative work, you know, I would have no rights to it as the author.

McBride: Well, our view on it is very clear. If you look at our contracts -- we have them posted at our website -- if you go read them, basically when someone takes a work and derives it, extends it, then they have responsibility to treat that work as though it's the product itself that we licensed to them, in this case System V.

DF: Let me ask you this. In your filings before the SEC you say: "Our SCOsource initiative is unlikely to produce a stable or predictable revenue stream for the foreseeable future. Additionally the success of this initiative may depend on the perceived strength of our intellectual property rights and contractual claims regarding UNIX, including the strength of our claim that unauthorized UNIX System V source code and derivatives are prevalent in Linux." Now this sounds to me that the claims that you are making are not necessarily proven even to yourselves, given that you put this statement into your filings.

McBride: Again, I think if you look at the claims we have out there, there are a variety of claims, and what that is in reference to is not everything that we have out there.

DF: So what are the claims that you feel are bulletproof?

McBride: Well, OJ is walking around free, so I guess nothing is bulletproof. [laughter, applause] But with respect to the claims that we feel very strongly about, Dan, we feel very strongly that in twelve months from now, a courtroom in Utah with 12 jurors are going to come back and say, We agree with your reading. I mean it's not really a complex case. You read the contract verbiage -- I got it right here -- it's not that complicated. We have a lot of faith that a Utah jury is going to come back to that conclusion.

DF: Well, if it's not that complicated, how come that armies of lawyers and people picking over the code and people talking about, Well, have you read AT&T's newsletter...

McBride: Right.

DF: ...the echo newsletter that says that the derivative works...

McBride: Right.

DF: ...are granted to the individuals who create them?

McBride: We'll be glad to take our contracts against the newsletter. OK? If you look at what the newsletter is claiming, it's claiming that you, in fact, own the derivative work. We've said that from the very first filing in the IBM case. IBM owns their derivative works. That's what the newsletter says. We're saying we have an easement through the back of the property.

DF: You have a backdoor basically into everybody's code.

McBride: I wouldn't call it that, per se, but I say we have absolutely property rights.

DF: Well, but you can extract a toll. I mean one of the questions is, you know, were you sold the Brooklyn Bridge or do you actually have the code? Now if it's indeed the Brooklyn Bridge, and you are trying to charge a toll for it...

McBride: Right.

DF: ...that's a major problem. [laughter]

McBride: Well, you know it's a, it's a good question that came up here. David Berlind wrote this article a couple of weeks ago, 'Did SCO Buy the Brooklyn Bridge or UNIX?'. We like to think we bought UNIX, because the contract says we bought UNIX.

DF: But the ... Well, we are getting into all that legal mumbo jumbo, but the Novell people are saying that the contract that you had allowed you to get the copyrights and IP, but that you didn't do it, and therefore it's not yours.

McBride: So if you take the Novell contract, it is a lot of legal mumbo jumbo, but one thing that a courtroom, a judge, or a jury can certainly understand is this part right here, under the assets that we bought that says "All rights and ownership of UNIX and UnixWare, including all versions." OK, I think I understand that.

DF: All right, all rights except A, B and C which they list.

McBride: "All rights and ownership of UNIX and UnixWare." Now if you go to the one thing they will claim, 'Oh, you didn't get the copyrights'. OK? Well fair enough. There is a part in there that says the copyrights didn't transfer over in the first pass. But a year later, there is an Amendment 2 that shows up and says, "Oh, in addition to everything you got a year ago, all copyrights are now transferred over for UNIX and UnixWare." OK? So that's why we filed a a complaint against Novell last month...

DF: The slander of title.

McBride: The slander of title. OK? They have come out and tried to say they own UNIX, and we, you know, what did we pay hundreds of millions of dollars for?

DF: Well, apparently that's up for the courts to decide or some other venue.

McBride: Right.

DF: But it still seems to me that if you're asking people to pay a license of $699 or $100 or whatever it is, that given the uncertainty as to whether SCO owns this or not, why should anyone pay?

McBride: Right. Let's go back to the baseline of when we started this program. We came back, and the Linux community first said, "Look, if your code is in Linux, please show us where it is. And we want to do something about it." So we came out, laid some code down, they came back and responded and said: "Oh, that wasn't supposed to be in there. We're gonna take it out." OK? Then we had customers saying, "Well, can we take a license? We want to keep using Linux. But could we just take down a license so we just, so we can keep running it?" We said, Sure, here is a license. So now we're in a situation of enforcing our intellectual property and...

DF: Your, your *alleged* intellectual property. [laughter]

McBride: Well ... it's, it's, we've, you know, we either paid millions of dollars for something or we didn't.

DF: Whether you made a good deal or somebody else, Caldera or some other company, years ago made a good deal or not, that's a separate question from whether or not you actually own the rights.

McBride: Sure. And believe me we, we'll be glad to see where that goes. The customers are stepping up. So in the case of EV1, Robert March, the CEO there, did a bunch of work with his customers. Customers are coming in, they were doing focus groups. And his whole goal is to have a data hosting environment that's very certain, very reliable, very safe. And one thing that kept popping up was this issue of being safe on the SCO issue. And he said, Look we're going to be totally safe. We're gonna take down one of these licenses.

DF: But it's certainly -- you know, that's a nice company, 70 million dollars in revenue, but it doesn't represent much of the universe of Linux servers.

McBride: Sure.

DF: In fact Linux is continuing to grow at an incredible rate.

McBride: Right.

DF: 63 per cent [inaudible] year growth... [1]

McBride: Right.

DF: ...at the end of 2003. So you're really not kind of stopping. In fact, IDC says it's going to be a breakout year for Linux. And when I talk to Gartner, they say what are the concerns if you're a Linux user, they say, well, there is a moderate concern about SCO but not a major one.

McBride: Right.

DF:So it seems like your message isn't getting through.

McBride: You know, we're basically enforcing our property. And there are going to be some companies that -- The one study I saw said 80 percent of the companies out there were not concerned about it. 20 percent were. So basically what's that? One in five are concerned.

DF: I haven't seen that research. But clearly if you have a win, it's a big windfall. People are saying your stock could go to $200, which would be nice for your investors.

McBride: Well, let's backtrack just for a moment. If you remember SCO back in the eighties, nineties, was the leading brand for UNIX on Intel. If you think about it in a horse-race metaphor, the UNIX on Intel race was going, SCO was way out ahead. As you head into early 2000s, all of a sudden SCO comes back to the pack and Red Hat shoots past it. OK? And now we are back on our horse and gaining ground again in some major, albeit probably small compared to Red Hat, but at the end of the day, that is the race. Now the question that it is going to come down to you is, we get through the court system and get our claims heard and the jury comes back with the verdict we expect to get, then you're going to see it come back in the other way. We're going to catch up and pass Red Hat again.

DF: So your goal is to pass Red Hat? A 100 million dollar company that sells a Linux. Now you used to sell Linux.

McBride: Yes, we did.

DF: And in fact you still use some open source code in products that you ship today.

McBride: Right.

DF: Such as the Samba...

McBride: We haven't any claims on Samba or some of these other projects. We are very specific about Linux. Linux replicates UNIX. We own the UNIX operating system. Linux is replicating it. When you go to Barnes & Noble and buy a book on how to program in Linux it says, 'How to program in UNIX/Linux'. When you read the book, it's not two different sections. It's the same book.

DF: But there is a very long history. You are talking about System V. But what about Ancient Linux and previous versions where you go back to BSD?

McBride: Sure.

DF: So it's not as cut-and-dried as you make it out to be.

McBride: Well, very clearly there are portions that have been made available in the public domain that we would agree with. OK? Just as clearly there are advanced versions of UNIX that people have paid a lot of money for. If you look at how much money IBM and HP and all of the big vendors have paid over the years, they paid that in the face of understanding that there was a public-domain element to UNIX. Look at how much McNealy paid. You know, he's paid over a hundred million dollars over the years. OK? That was for versions for System V that came from AT&T that were different from the ones that were running in the BSD environment.

DF: But that's presuming . . .

McBride: He had Bill Joy working there. Bill Joy was one of the guys who put BSD together, and they took down a license for all this, so . . .

DF: That was prior to Linux and obviously they have a vested interest in Solaris, and they have actually given you money for a licence, as has Microsoft, so you have the two people who really aren't big fans of Linux paying a huge portion of your revenues right now. In fact, Microsoft paid, like, 12 million dollars so far out of a 25 million dollar quarter. And some people would even say that Microsoft is behind SCO, but I find that very hard to believe, because with David Boies on your side and Bill Gates on the other side, that seems impossible. Those two could never get together after the skewering that he got.

McBride: Yeah, so it is an interesting setting that you're looking at, and obviously I hear the same conspiracy rumors that are out there that you're hearing. But I can tell you from a personal standpoint, being in the the driver's seat on these deals, you know, that there is none of that going on.

DF: Let me ask you. You missed a deadline on February 18th where you were supposed to have a suit against a user, a company that is a big user of Linux, and bring to mind Amazon, Google, Verisign -- just to name a few.

McBride: Right.

DF: Are you about to pop on that one?

McBride: Right, so.. David came out in February or in November -- I'm sorry -- and said within 90 days expect to have a lawsuit out. That would have been February 18th. We missed by a couple of weeks. The first one won't actually show up until tomorrow.

DF: Tomorrow.

McBride: Right.

DF: So can you name the company that you are going to be suing?

McBride: I can't go into that right now. There are actually a couple of factors right at the end here, but tomorrow we'll have that announcement out.

DF: And does this company know at this time that they're about to be hit by a lawsuit?

McBride: Only if they're a palm reader. [laughter]

DF: OK, so tomorrow is going to be an interesting day. So by "palm reader", are you inferring that the company that deals with the Palm platform is going to be your target for tomorrow? [laughter]

McBride:[laughs] If they can read the Palm...No. What it comes down to is, we have had multiple communications with a handful of companies that have kind of come down to the finish line here with where we will start with the end user litigation. And so when I say they won't know it's coming -- they will absolutely know, we have been in communication with them, we've gotten to the point where you know we are where we are now, and now it's time to move to the litigation part of the enforcement.

DF: And is this a company with, bigger than EV1servers.net or . . .?

McBride: Yes.

DF: So it's a major company who everyone will recognize?

McBride: Yes.

DF: That's not Palm.

McBride: No. It's not Palm. And it is one that everyone will recognize.

DF: I have a question just about the licensing, separate from whether people should actually acquire a license given the uncertainty about whether your claims are valid or not.

McBride: Right.

DF: Which is why charge $699? Why not say, We are not out to really capture a huge market or have the same license fee as other server software. Why not charge 50 dollars or 100 dollars?

McBride: Yeah. Well, if you take the value proposition of our core UNIX offerings and compare that to where Linux is, you're basically getting the same thing. We have priced this at a discount of where we are typically selling our UNIX servers. You know we'll start at 800 dollars and go up to a few thousand, depending on the configuration.

DF: But if you don't make the distribution, then why should you pay a full server license?

McBride: Right. So what we came back with was, look... if some ... the question came to us, we aren't the ones who started the licensing deal, it's based on the customer, if the customer comes to us and says, "Hey, if I can keep running Linux, what would it take to keep you guys happy?" We took a discounted price over where we were, but it was enough that the ticket would be fine. We do have an annual feature where if you want to pay a 150 bucks a year instead of the 699, then that works for us too. We have introduced that just recently.

DF: So you're -- right now you have specials on for the licenses? You know, you get your license by this time, we'll give you a very special deal?

McBride: No, we are trying to take this pretty seriously. We have gone, we've had a handful, a handful of companies sign up. A major deal we just signed up that is material for us that we just announced this morning. And we have taken a lot of care in moving through this process on the enforcement side of it, especially with respect to the litigation that's going to start tomorrow. So we put the licensing plan out there, we said you know take this. But some customers have said, "Look, we want to see the claims heard in a courtroom." Then tomorrow, that's we're going to say: "OK, let's go to court and let's get your claims heard."

DF: Let's talk about some of the other issues. One is the flavor of the argument that's going on that's fairly contentious. It's almost a religious type of argument.

McBride: Right.

DF: For example, Linus Torvalds has said that "They are a cornered rat," referring to SCO, "and I think they have rabies to boot." [laughter] And here is a remark that you made: "IBM is the master of creating an illusion that they're being attacked by this big, brutal bully, SCO, when they are the ones are attacking us. They are the ones who are doing all the behind-the-scenes work." Now, I don't see a lot of comment from IBM, maybe they are doing some behind-the-scenes work. But it seems like most of what's been played out has been played out from SCO in terms of trying to characterize, you know, your claims versus the claims of the Linux community, which seems to be the voice of those who oppose.

McBride: But you would agree that there are people that are boisterously attacking us in the marketplace?

DF: Yes, and in fact of denial-of-service attacks.

McBride: Right. I read there in USA Today this morning the MyDoom.f version is out there now attacking RIAA and Microsoft and somebody else. So this thing keeps going on and on. You know, I think with respect to the organizations that are out there attacking us, there are absolutely very strong links into IBM. I mean...

DF: Well... how ...

McBride: OSDL. OSDL is very strongly funded by IBM. OK?

DF: And you are strongly funded by Microsoft. So...

McBride:Well, yes but about IBM, so let's talk about them for a minute. OK? So you got OSDL where Linus works -- that's funded in part by IBM. You've got Groklaw. That's the Internet chatboard of, you know, everything having to do against SCO...

DF: ...or with SCO.

McBride: Yeah, but it's attacks against us. You don't see things on there saying, Oh this is really strongly in favor of SCO or even half strong in favor. So you go peel that away and you realize IBM is a sponsor of Groklaw. OK ... and as you go look at Novell and the attacks they are putting out against us, you realize IBM put 50 million into them. So to say that IBM doesn't have some connection with these other people is, it rings hollow.

DF: So there is a conspiracy out there on both sides?

McBride: I don't see a conspiracy. It's pretty straightforward. And there's nothing hidden about it.

DF: So there is a lot at stake, and maybe we can move the topic of conversation to something a little higher level than conspiracy theories.

McBride: Right.

DF: And I'd like to focus for a moment on the letter that you sent to Congress in January in which - I'm just paraphrasing a little bit but - in which you're saying that "Open Source as it's currently constituted is a slippery slope. It undermines our basic system of intellectual property rights and destroys the economic reasons for innovation. There is really no middle ground. It is not an understatement to say that the future of the global economy is in the balance." That seems like quite an indictment.

McBride: If you look at what the Free Software Foundation is saying about proprietary software, Stallman and the folks over there have made comments that they think that proprietary software is evil, and it should not exist. I mean how many people in here are involved with some level of proprietary software? That's what they are saying: It is evil, and it should not exist. OK? These are the folks that bring you the GPL. So if you look at IDC numbers and if you you look at the WIPO numbers in the year 2007 the projections are 289 billion dollars for software, proprietary software. If you look at the goals of the Free Software Foundation that has the license that governs Linux, it is that all software will be priced at zero. OK? So, 289 billion or zero. I do call that a slippery slope. I think it's a running a dangerous path.

DF: But that's just an extreme view, as they have on their end at the other end of the spectrum.

McBride: It's an extreme view. But the extremists are the ones that are setting, they are the ones that put the GPL together.

DF: But let's look at the GPL for a moment.

McBride: OK.

DF: The GPL basically says that it respects intellectual property rights. It just says: if you want to put it out in this form, this is the way you do it.

McBride: Right.

DF: And these are the characteristics of it. But it doesn't mean that it can't live in a hybrid environment with proprietary software.

McBride: Except that if the proprietary touches the other, then it supposedly gets destroyed. I mean ask CISCO. Anybody heard from CISCO? They're getting attacked by them at this very point right now on their Linksys acquisition. You have the drug, the biotech, companies. You go and put together a new drug formula, and because it's software and touches GPL, if you're not careful, that gets destroyed. So I think it's a very dangerous setting we're talking about.

DF: But just don't need things to evolve? It's not GPL and Open Source bad, proprietary good. We are going to have both...

McBride: Absolutely.

DF: ..and in fact you are a company that uses open source development tools.

McBride: And we've donated things to open source. We're not saying that open source, per se, is bad. But we think that when you make something that is an industry standard that requires that your software value be destroyed, we don't think that's a good thing.

DF: But you don't have to put it out as open source.

McBride: I understand. And in the case of our situation with the GPL, we're not arguing over things that we put out there. We're arguing about things that we see showing up inside of Linux that are against our property rights, and that's what we're making claim to.

DF: But that's precisely it. You're making claims against your alleged property rights as opposed to the notion that the GPL and open source are bad. Your claim, it seems to me, is that open source is using intellectual property that you claim to own. So why attack the GPL as something that's potentially unConstitutional or unAmerican?

McBride: Well, one thing that's interesting ... I mean take ... so maybe you can discount our arguments -- we have a vested interest, obviously, to beat these guys up. Discount Microsoft's arguments. They obviously want proprietary, not free software. But go look at, go do a Google search and...

DF: But is software really free?

McBride: That's the question. But go look at a Google search. Some other independent third-party attorneys are out there right now saying that this notion of a GPL being a licence and a contract at the same time are pure gibberish. These are not my words. These are academic lawyers.

DF: But we have other academics who are taking a completely different point of view and are saying that bits are not like atoms, that there needs to be changes in the copyright notions of dealing with digital data.

McBride: Right.

DF: And yet, you know, we're kind of sitting here as if nothing has changed, and we going to apply same old laws.

McBride: And I think that's the the slippery slope that I'm concerned about. If you look at Congress has weighed in on this with the Digital Millennium Copyright Act from a few years ago. As recently as just a year ago, the Supreme Court in Eldred versus Ashcroft came down and weighed in heavily and said the public good, progress of science, is best driven from people who have private ownership interests, and we celebrate the profit motive. So they have weighed in within last twelve months that said profits are good. And you should be able to ... You know, I think there are three points here: technologies come and go. I think for everybody in this room that deals with technology.. Technologies are going to come and go..But the three points that I would go to is: 1) You ought to be able to have private protection on it; 2) It should be able to operate in a free market environment. It shouldn't be artificially suppressed down to zero; and, 3) There should be a rule of law to be able to enforce it. You know, enforcement should happen through the courtrooms, not MyDoom viruses.

DF: But these are individuals, not governments, who are making these products. And therefore to say that someone can't decide that this is how I'm gonna sell my product, I'm going to put it into this GPL, people can use it. There are companies with hybrids that say if you make a commercial version, you can charge for it.

McBride: Right.

DF: But that's different. So there, there's not...

McBride: I agree. I have no problem with people putting things into GPL. I have problems with people putting my things into the GPL.

DF: That comes back to the same issue, which is do you allege that there are things that SCO owns that are going to the GPL?

McBride: Absolutely.

DF: And therefore would you admit that the GPL is not all bad?

McBride: ...Oh, ah, no, it's absolutely not all bad. I just think that with a few minor tweaks of it, it would be actually pretty good.

DF: And what tweaks would you make to it?

McBride: Oh, I think the whole part about the price thing. Go look at the differences between a BSD-style license and a GPL license. I think those spell out the differences that I would be concerned with.

DF: Now you have also said in your letter to Congress that Linux and open source are a threat to national security.

McBride: Right.

DF: How do you justify that?

McBride: Well, we justify it because when IBM licenses AIX, when HP licenses HPUX, when SUN licenses Solaris, all these guys have requirements in there from an export control standpoint that you keep this material protected. So the proprietary versions of UNIX out there today have an absolute standard that you can't put this stuff out in the open and and let, you know, third-world countries, Iran, Iraq, different places, get hold of it. In the open source ...

DF: Well, it's not too hard to get hold of any code...

McBride: In the open source world, basically you have a situation where you can get hold of it and in, that's a major problem. We've met with some people at Capitol Hill, and they agree that it's a problem that you can get access to something that, you know, you can go create a supercomputer out of a few Intel boxes, and you are up and going.

DF: Let me read to you what USENIX had to say in response to that kind of thing.

McBride: Great.

DF: That the US export control authorities have acknowledged the impossibility of restricting the geographical distribution of most computer software programs in any event. Neither area of law hinges on whether software programs are licensed for a fee or for free. Or whether the innovations are kept secret or shared.

McBride: So if you come back and look at the requirements we have with the United States government with respect to export control, they're very tight.

DF: But I can go to your site, pay for a license and then give it to somebody in Iraq.

McBride: I understand. But if I go out and make that available to somebody in Iraq, the US government is going to come after me. OK? I'm just saying that there is, they're out of sync right now with proprietary versus the open source versions. They are absolutely out of sync.

DF: But doesn't the government even have its own secure versions of Linux? So are you suing the US government, the NSA, because they use a secure version of Linux?

McBride: They are not going to be named tomorrow in the lawsuit. I can guarantee that. [laughter]

DF: OK, still trying to get there. Now there seems to be some people are saying that the case is due in court in about a year?

McBride: Yes. April 11, 2005.

DF: So what are the next steps that are going to happen over the next year, besides a bunch of, a flurry of lawsuits, to get to court? Or is there any chance that you'll look to settle, to be bought out?

McBride: The next steps, in the IBM case, we're dealing with primarily a set of contract issues. We've recently added some copyright claims into that...

DF: But you took out the trade secret.

McBride: Right. The most part of the IBM case revolves on contracts. That's moving to litigation. Litigators do what they do, discovery motions back and forth. But we look forward to be in front of a jury in 13 months from now. Over on the copyright side, which has more to do with the end users who're off using this, that's really, we're just starting that tomorrow and that will have its own lifespan and we'll just see how that plays out.

DF: Now you are going to sue one company tomorrow. Do you have a bunch of others that you teed up so that you have a good number of suits? Regarding the users.

McBride: Well, we are not speaking yet about where we go on that front. You know, if you look at the type of problems, digital piracy problems, if you look at the RIAA and what they've done, I don't see hundreds and hundreds of lawsuits like the RIAA did, but we definitely see more than one.

DF: So as you look to the future, do you see SCO becoming a company that is no longer thought of as the outlaw, as the company that everybody loves to hate? What would it take, do you think, for SCO to become a company that is respected?

McBride: Well, I think if you talk to our customers right now, they have a lot of respect for the technologies we're delivering. Seven of the top ten retailers around the world run on SCO UNIX software. When you go in and order a Big Mac today, SCO UNIX is in their power net transaction.

DF: That's the Santa Cruz Operation legacy, right?

McBride: Right. But again we have 300 employees. 290 of them are working today on delivering products. It happens that the products they're delivering are being undercut by a free version out there that does basically the same thing. So we have one part of our company that's focused on enforcement efforts, the other majority of the company that are focused on delivering products, and as you see our company go forward, you're going to see us very focused with the core business on providing some interoperability solutions that we think will grow that business.

DF: Really, we're talking about intellectual property versus what you're calling free, but actually is not necessarily free because most of the companies are building around I guess what you'd call a service, delivering services. And that software operating system is a part of that.

McBride: Right.

DF: But not a big part of it. So why, why in your case do you think that that model is flawed, given that that's where the industry seems to be going.

McBride: The industry that's "going that way" are people who have services they're adding in on top of that. Large hardware vendors that have large service organizations love that model.

DF: We'll have to end it on that note because I see that the clock has hit zero. Thanks very much Darl.

McBride: Thanks very much, Dan.

[1] While I was unable to make out the specific words, I believe he is referring to the following report from International Data Corp., as reported on CMPNetAsia.com:

"Unit shipments of Linux servers increased 52.5 percent in the fourth quarter of 2003, compared to the same period the prior year; and revenue from the operating system jumped 63.1 percent to $960 million, according to International Data Corp. Unit shipments and revenue from Windows servers also increased."