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Some Indemnification Bits for Historians
Tuesday, February 07 2006 @ 05:03 AM EST

So I was cleaning off my dying hard drive, trying to salvage whatever vital materials I could before it gave up the ghost and headed for Hard Drive Heaven, and I ran across some things I totally forgot I had, things I'll be posting, to get them all on the record.

I had earlier written that Microsoft was the first to mention indemnification and Linux in May of 2003. I've found an even earlier sighting. Microsoft mentioned it in November of 2002, even before -- and just before -- SCO and the Gang started its attempted Rape-and-Pillage-Linux business model. The Indemnification Chorus sang later, but it was Microsoft's song.

Here's the proof. Take a look at this article from The Register, dated November of 2002:

The CEO of Microsoft Israel has played the FUD card against Linux, raising doubts about the provenance of the intellectual property in the software, and advising potential customers to seek indemnification from the supplier in the event of patent infringement.

Or at least we think that's what Arie Scope said in an article here last week... which provides a response to open source initiatives in Israel. These include proposed legislation on the use of GPL software by the government.

In the article, Scope says: "IBM is not developing its own version of the Linux OS. Rather than that it distributes Red Hat's version and clears itself from any liability in case the customer changes the code. I advise organizations to review the licensing agreement of Red Hat distributed by IBM, and ask the company for legal protection if it turns out that the OS infringes patents."

Is that not the most remarkable of coincidences? Why, he sounds quite like Darl, don't you think? The author of the piece, John Lettice, back then thought it might mean Microsoft was gunning for Red Hat:

One also wonders whether a lawsuit against Red Hat Advanced Server might just be sitting in a silo near Redmond, waiting for someone to push the button.

Remarkable deductive reasoning, I must say, but he was thinking way too small. SCO ended up suing IBM over Linux, wanting to set up a toll booth on all distributions of Linux, not just Red Hat's. The toll payments were for SCO, in their imaginings. Ka-ching.

But, you say, SCO doesn't have any Unix patents. Ah yes, but they've been such due diligence dunderheads they seem to have thought they did (or said they did) when they started. How do I know? Because when SCO sent a letter on May 12th of 2003 to SCO's partners, this sentence appeared: "This communication is about recent efforts SCO has made to license and protect our patents, copyrights and intellectual property pertaining to the UNIX operating system." So, there we are. The timeline goes like this, then:

  • July of 2002 - Darl McBride is hired and immediately starts studying up on SCO's IP assets, as you'll remember from the Wired piece on Darl as -- ha ha -- "the Linux Killer": "In 2002, when Darl McBride bounced into the top spot at SCO, he began studying its patents and other intellectual property assets..."
  • In November of 2002, Microsoft starts the FUD about Linux, patents and indemnification, as noted.
  • SCO sues IBM in March of 2003.
  • By the end of the quarter ending April of 2003, Sun and Microsoft had thrown millions at SCO for licenses, or at least that is the story, and they're sticking to it, and thus SCO could afford to sue the world.
  • In July of 2003, Ballmer says no one stands behind Linux. ("Can IBM give you a product roadmap for Linux? Can they deliver new features and fixes to Linux? Does it indemnify the intellectual property in Linux? No, no and no," he said....Many customers and analysts are also aware that there were issues around Linux, open source, and patent and intellectual-property issues, Ballmer said. At a Q&A after Ballmer's address, Chairman and Chief Software Architect Bill Gates said that Linux is not covered by many of the cross-licensing agreements in the software industry, leaving an opening for new IP disputes.)
  • In July of 2003, Bill Gates says Linux will have legal troubles for the next four or five years. Don't laugh. It's been three already.
  • The indemnification chorus begins to sing in July and are singing in harmony by August of 2003, with Laura DiDio taking the lead and calling on IBM to offer indemnification for Linux customers, a suggestion IBM declines.
  • Then Microsoft, according to the floated ^H^H^H^H^H^Hleaked Anderer memo, made sure that the first PIPE Fairy, Bay Star flew over Utah, so SCO could afford to rape and pillage some more. Not that they ever quite managed to accomplish that part of the assignment, but hope springs eternal, as the saying goes.
  • Microsoft in January of 2006 distributes an insert in the UK tech press on "Indemnification - Weighing the Risk," using the SCO case to make Linux sound very risky indeed.

And Vista still isn't ready. I wish they'd hurry it along, so SCO could fold up its tent, hop on its camel, and ride off into the sunset. So, there you are, full circle, for the historians, the last little Microsoft circumstantial piece.

This letter to partners from May of 2003 is a document that we don't have on Groklaw, because it predates Groklaw a day or so, but because we are striving for completeness, here it is now for history, SCO's Dear TeamSCO Partner Program letter [also at]:

Dear SCO Partner:

As a SCO Partner, we thank you for your support and continued business. Because you are a valued partner, it is important that we make you aware of important SCO business decisions and announcements as soon as possible. As such, we wanted to make you aware of an important announcement made today.

This communication is about recent efforts SCO has made to license and protect our patents, copyrights and intellectual property pertaining to the UNIX operating system. As you know, on March 7, 2003 SCO announced that it filed legal action against IBM in the State Court of Utah, for misappropriation of trade secrets, tortuous interference, unfair competition and breach of contract. The complaint alleged that IBM made concentrated efforts to improperly destroy the economic value of UNIX, particularly UNIX on Intel, to benefit IBM's new Linux services business.

As we have progressed in our discovery related to this action, SCO has found compelling evidence that the Linux operating system contains unauthorized SCO UNIX intellectual property (IP). Due to this discovery, we are taking three immediate courses of action.

1. The first is to send a letter alerting commercial users to the fact that legal liability for the use of Linux by businesses may extend to end users. Customers should start receiving this letter today. For your information, a copy of this letter may be found here.

2. The second action we are taking is to suspend all future sales of the Linux operating system from SCO until the attendant risks with Linux are better understood and properly resolved.

3. Finally, although this action affects future development and sales of SCO's Linux offerings, SCO will continue to support our SCO Linux and OpenLinux customers and partners who have previously implemented those products and we will hold them harmless from any SCO intellectual property issues regarding Linux. SCO will continue to honor all contractual obligations with existing customers including product updates, service, and support.

As many of you are already aware, SCO UNIX systems continue to sell well - including an increase in OpenServer sales over the previous quarter. Our UNIX products continue to support many of the world's largest businesses. In addition, new customer sales indicate that there is still no better option for rock-solid, dependable technology for their core businesses than our SCO UNIX solutions.

We are excited to be building on our SCO UNIX history as we roll out our next generation UNIX operating system and SCOx framework this fall. SCOx will allow small and medium business customers and branch offices to plug their existing applications into a Web services environment. Details of this strategy will be unveiled at SCO Forum in Las Vegas late this summer.

SCO remains committed to building new business opportunities for our partners such as you. We recognize that you have depended on us to provide reliable, solid technologies for your customers for over twenty years. We look forward to helping you and your customers meet your business needs for the next twenty years.


Darl McBride
President and CEO
The SCO Group

The next twenty years? Um. Well, Darl was always good for a bit of hyperbole.

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