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SCO Considering Next Steps After DC Setback & Another Novell Delay
Tuesday, January 25 2005 @ 12:07 PM EST

We were wondering what happened to Rob Enderle, and now, here he is, saying something sensible. I know. But I have to tell the truth, whatever it is. Bob Mims of the Salt Lake Tribune, in his article "Michigan ruling is a setback for SCO", asked him to comment on the appeal being dismissed in the DaimlerChrysler case, and here is what he said:

DaimlerChrysler did not answer requests for comment, but Rob Enderle, an industry analyst with San Jose, Calif.'s Enderle Group, characterized SCO's decision to sue DaimlerChrysler as one of the Utah company's "weakest actions."

"The high burden of proof . . . made this an unwise path for SCO," he added.   "The outcome should not have surprised anyone and the appeal was a waste of much needed financial resources."

You notice the really good legal firms say absolutely nothing and their executives don't either. SCO seems to be catching on and didn't want to say much about it this time either:

SCO spokesman Blake Stowell had no comment on the setback Monday, other than to say that the Lindon software company's "legal team [is] still reviewing the dismissal and considering its next steps."

News of the ruling came just days after SCO claimed a notable, albeit minor, victory in a Salt Lake City federal court case against IBM. Last week, U.S. Magistrate Brooke Wells gave IBM until March 18 to provide SCO with more than 2 billion lines of AIX and Dynix code, along with the programs' developmental details.

Dion Cornett has a few words on that subject, and he also says there is a delay again in the Novell hearing. I am hearing it is postponed to March 3 at 3 PM.

Decatur Jones' Dion Cornett, in his latest Open Source Wall Street:

SCOX decision removes near-term catalysts and Intergraph settlement on patent not copyright

As detailed in last Thursday’s e-mail note for clients, The SCO Group (SCOX: Market perform) last week won arguably its biggest legal victory to date requiring IBM (IBM: not rated) to turn over 2 billion lines of code, revision information, and 3000 developers’ names.

The decision does not alter the fundamental flaw in SCOX’s claims that it owns code never part of UNIX SysV and in some ways the judge’s favorable language regarding contract claims overriding copyright, in our view, could possibly be used against SCOX as Novell (NOVL: Outperform) argues that it has a contractual right to terminate SCOX’s legal efforts.

Furthermore, granting of such a broad discovery request places an additional onus on SCOX ahead of a ruling on IBM’s motion for Partial Summary Judgment to produce more detailed evidence of infringement. With respect to SCOX’s stock, the decision delays near-term potential catalysts related to the IBM lawsuit and we believe that an upcoming NOVL hearing is likely to be delayed as well, based on conversations with SCOX management. In SCOX’s favor we believe that analysis of the code is already factored into its $5M escrow account and the ability to look so completely into IBM’s development process is likely to produce additional ammunition for lead counsel with which to sway a jury. Separately, while Hewlett Packard’s (HPQ: not rated) $141 [million] settlement with Intergraph (INGR: not rated) last week is not necessarily analogous to SCOX’s claims because it was based on a proven patent, we note it since large copyright awards are generally rare even when the copyright holder has attempted to mitigate damages, something SCOX has not done. (Please see our Aug 2003 Initiating Coverage report for a discussion of Lemelson’s patent claims and analogies to SCOX’s lawsuit).

The other case he mentions, the HP-Intergraph case, is a stunning example of how the patent system works. Or doesn't work, depending on your viewpoint.

Intergraph sued HP, Gateway, and Dell in 2002, just after forming an intellectual property division, claiming patent infringement. Intergraph is a software company which has patents related to cache memory technology. The patents involve products containing Pentium processors.

They have now settled with all three, and their winnings for their IP enforcement campaign total $860 million in pre-tax income. If you are interested, here are the details of the recent HP-Intergraph settlement. I'm sure you can understand, when you read it, why the pro-software patent folks are unwilling to give up their hopes, and also why something really needs to be done about the patent situation as far as FOSS is concerned. To old-fashioned businesses, the patent litigation lottery is part of doing business. They do it all the time to each other, and they factor it in as a cost of doing business. But FOSS developers can't play in this millionaire's club, so that will help to clarify the importance of IBM taking the lead to create a safe patent playground for Open Source developers to play in.

Here's an article by Stephen R. Walli, who used to work for Microsoft, and his view is that patent infringement is so typical, so inevitable, that FOSS will just have to learn to play that way:

Every day developers may be infringing the claims of other people's patents. This has nothing to do with open source development methods or licensing. No developer can actually be aware of it. Developers read the news and trade journals, and then go to work. There are seldom warnings in articles about pending patents. Debate rages on whether or not developers should ever attempt to understand the patent infringement risk for the code they write. With patents written in legal language and targeted as broadly as possible (semantic shotguns instead of rifles) it would be almost impossible for a developer to track the patents relevant to their work. And of course the lag problem still exists, meaning even if the developer had the time and training to review patents in their area of expertise, they cannot know whether or not their work infringes someone's patent claims in any meaningful time frame. And if it looks like a developer may have attempted to study the problem, and perhaps misread or misinterpreted a patent's claims, then they may be construed as having “willfully” infringed a patent's claims by the court and that brings additional financial damages.

So when Linus Torvalds suggests that developers ignore patents, he is not some OSS mongering communist that believes intellectual property has no value, but rather he's simply working with the reality the system presents to him. Large software development companies shipping proprietary closed source products also tell their developers to not investigate the patent space for the same reasons. It would be interesting for the large vendors to come forward to discuss their practices for developers around patent investigation, rather than slinging useless rhetoric. . . .

Santa Cruz Operation was a company with a product it sold to customers. They are no more. . . . The SCO Group appears to be a litigious engine that is designed to sue another vendor for damages, not unlike previous legal forays of some Canopy Group companies. SCO Group appears not to be in business to sell to customers, indeed they can “sue a customer” to appear to put pressure on the primary lawsuit. The Daimler-Chrysler and Autozone suits hit the news in March 2004. So far the tactic has failed in relation to the primary suit. This is not a business with customers, but a legal play to siphon money out of the system.

So as OSS continues to deploy and grow in enterprises, those companies will need to consider the source of the technology they use, and their vendor relationships, which is no different than any other technology shift in the past decades. As for OSS developers and vendors themselves, David McGowan may have said it best:

“If the F/OSS community wants to be in commercial space, community members will have to learn to deal calmly with IP litigation. The F/OSS production model will work where it makes sense, and it will not work where it doesn’t. It’s really just that simple. Particular claims in individual suits—even one against a flagship program such as the GNU/Linux OS—will not determine the fate of the community. Such cases present factual issues that will get resolved one way or another; they do not represent a crisis for F/OSS production as a whole. Norm entrepreneurial rhetoric that plays off such cases should be treated as entertainment. Enjoy it if you like it, take inspiration from it if you must, but don’t confuse it with the way things actually get done.”

He isn't kidding about the business without customers part. Netcraft looked to see how many SSL-enabled websites run SCO Unix, and they found only 70, which they felt was why their not patching security flaws for almost a year didn't have more of an impact. Of course there are others that are not set up for SSL, but still. That last quote is from McGowan's paper “SCO What? Rhetoric, Law, and the Future of F/OSS Production”, in which he sneers at FOSS and says we essentially need to grow up:

The community’s shocked and outraged reaction to a perfectly ordinary suit by SCO against IBM suggests that community members need to adjust to the space they wish to invade.

First, I think he has it backwards. It is corporations that discovered Linux and wanted it for their own purposes. But if they want it, they have to play by the rules, and that means the GPL. So many folks don't get the GPL and why this "ordinary" lawsuit isn't ordinary at all, but is a direct attack on the free as in speech aspect of the GPL, as well as attacking the new method of software development, which the GPL enables.

People care about free as in speech. We just do. And how foolish would one have to be not to choose a better way of innovating in software development?

But, if I may be allowed to say it, the thought of adjusting to proprietary ways is patent nonsense. Trying to extrapolate from the old business model and slapping on the new is never going to work. All it can do, if allowed, is kill off the new, and that's unthinkable. The public wants better software, and they want software that comes to them under the GPL. I know, because I am a member of the public, and that is what I want. Why? Because it benefits me as an end user. The world at large, outside the US, is simply not interested in letting Linux be killed off. Linux comes with the GPL, and that is an unchangeable fact, so the world will have to bend and change its ways of doing business, not the other way around. Barring, as I always say, martial law, and assuming a free market, where we actually get to choose what we want, people will choose free and open source software, and specifically GNU/Linux systems. They already are.

So, that is why IBM is thinking fresh about patents and looking for ways to enable the new, not that everyone has yet fully grasped the significance of what they are doing. Some, though, do understand:

While the contribution is significant, it's not entirely unexpected, adds Dan Ravicher, executive director of the Public Patent Foundation, a nonprofit legal services organization in New York working toward patent system reform. Most legal observers would have presumed before the announcement that IBM would not sue, at least in the near term, the makers of open source products off of which it is making money, Ravicher says.

To IBM's credit, by granting access to any open source developer, not just those with which it partners, the company is allowing broader access than what had been presumed, Ravicher says.

Linux creator Linus Torvalds says IBM's move is a good first step toward solving some of the problems with software patents. "Will this make patent problems go away? Obviously not. Would I have preferred that IBM open all their patents and speak out against software patents in general? Hey, sure," Torvalds wrote in an e-mail interview. "But no, that's not how things work. I'm pragmatic."

It isn't just in software that there exists this tension between patents and innovation. The scientific community, academics and nonprofits, are also struggling to keep patents from choking off innovation that is, some believe, costing the human family advances they could otherwise be benefitting from. Some there too are also thinking along the lines of a patent commons:

Just like open-source software, open-source biology users own the patents to their creations, but cannot hinder others from using the original shared information to develop similar products. Any improvements of the shared methods of BIOS, the Science Commons or other open-source communities must be made public, as well as any health hazards that are discovered.

BIOS has called on Brian Behlendorf, CTO of ColabNet, to create the web tools the open-source community platform will run on. Those should be up in the coming weeks.

Nipping at its heels is the Science Commons. The outgrowth project of Creative Commons will have a hand in all areas of science, not just the life sciences like BIOS, and is getting ready to launch its open-source community in the next two to three weeks, said John Wilbanks, executive director of Science Commons.

It's actually CollabNet an alert reader tells me. When universities decided to try to get in on the patent game and get a taste of the action instead of fixing the patent mess, they didn't think it through to the end point. You can't beat the millionaire's patent club. Whoever has the most patents and the most money always wins that game. Now they find themselves blocked from doing fundamental research. Live and learn.

I'm sure you can see from the Intergraph math that IBM has no power to eliminate the old patent system all by itself. It's a matter of education, and taking that first step and getting others to follow, but companies like Intergraph are certainly helping to educate the world. I trust HP, for one, is currently thinking deep patent thoughts.


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