Stowell also denied that SCO would target other Linux distributions, basically suggesting that it would be suicide for SCO to do such a thing. "Microsoft would love to see that happen," he said. Instead Stowell suggested that SCO would take out after other unidentified operating systems that drive something from Unix and hinted that that might mean Microsoft itself since Boies was involved.-- Blake Stowell, 2003-01-13

IBM walked away from Project Monterey, and they told us if we didn't like it, sue us. That took two years out of our life. IBM took chunks out of Monterey, and gave it away. You can find it in Red Hat and SuSE Linux. When IBM pulled out of Monterey, they did it concurrently with moving over to Linux. The heat has been turning up on this for some time.-- Darl McBride, 2003-04-24

We approached Red Hat [about licensing source code libraries] and they thought [our claim] was interesting. They said they'd talk about it, but then called back and said we'll pass [on licensing the source code from SCO]. [Red Hat Chairman and CEO Matthew] Szulik said copyright issues scare him. But Red Hat has had a free ride. In its IPO filings, one of the warnings to investors stated clearly that Red Hat may be violating IP and one day they may have to step up and pay royalties. Why not? Every time I ship a copy of my operating system, I pay royalties to Novell and Veritas. There will be a day of reckoning for Red Hat and SuSE when this is done. But we're focused on the IBM situation.-- Darl McBride, 2003-04-24

Who's making money off Linux? Red Hat barely had its head above water and it's right back down again. If you look closely, a lot of the Linux distributors have gone out of business on this model. You have to ask, who is making money? And it's IBM. IBM is making money on boxes and IBM Global Services. If you're this company, don't you have an interest in the operating system being commoditized because there's more money in hardware and services? Linus Torvalds regulates the trademark and determines what goes in and out of the kernel. So who is the policing agency that checks the code and makes sure there aren't IP violations? Linux doesn't have IP roots. If it's true that IBM has violated, let's get some roots in the ground on this.-- Darl McBride, 2003-04-24

We are finding SCO-owned code in their [Red Hat and SuSE] distributions.-- Chris Sontag, 2003-04-28

We are using objective third parties to do comparisons of our UNIX System V source code and Red Hat as an example. We are coming across many instances where our proprietary software has simply been copied and pasted or changed in order to hide the origin of our System V code in Red Hat. This is the kind of thing that we will need to address with many Linux distribution companies at some point.-- Chris Sontag, 2003-04-28

What he meant was that if SCO prevails in their lawsuit with IBM, companies like Red Hat and SuSE may need to revisit their distributions and remove any UNIX system code from their distributions and compensate SCO in some way for the software code that they benefited from by using our UNIX code.-- Chris Sontag, 2003-04-28

"There's a point in time that has to be resolved with those guys [SuSE and Red Hat] too," McBride said, "but that's not currently what our legal approach is about."-- Darl McBride, 2003-05-01

Asked if SCO planned legal action against Red Hat and SuSE, SCO Chief Executive Darl McBride told CNET News.com, "There's a point in time that has to be resolved with those guys, too." However, he said such action isn't currently part of SCO's legal proceedings....-- Darl McBride, 2003-05-04

"Legal liability may rest with the end users. It is not carried by the distributor or by anyone else involved in selling that Linux distribution into these commercial accounts. It resides with the end users, which is unheard of. They need to know they have exposure in this issue," Sontag said.-- Chris Sontag, 2003-05-15

Q: What are the Red Hats of this world, the other distribution companies, doing?

It's a good question. We have had over the last six months, various discussions with distributors about intellectual property issues and how to resolve them. We've worked with these guys on the front end. We've thrown out different models. We've looked for ways of working together and we've been politely told that they are not interested in working out those kind of deals.

... They were polite, though. [laughs] They let us know in a very kind way.-- Darl McBride, 2003-05-16

Q: What you are saying then is: if there is Unix code put into Linux by IBM, and SuSE is using Linux, they would therefore be liable by default?

Yes.

Q: Would that also be true of Red Hat?

The same issue in terms of inappropriate intellectual property in Linux being distributed by any commercial distribution would provide them with the same issue. So Red Hat, SuSE or any other commercial distribution would have equal liability.-- Chris Sontag, 2003-05-16

"Both companies [IBM and Red Hat] have shifted liability to the customer and then taunted us to sue them. So that's all they have left us to play with," said McBride.-- Darl McBride, 2003-06-08

"Do we have potential issues with Red Hat, SuSE and other commercial Linux distributors--yes, we might," Sontag said, adding that chances for negotiating with such companies appear to be slim.

"Red Hat has been saying all along, 'We don't believe in licensing IP (intellectual property),'" he said.-- Chris Sontag, 2003-06-13

Sontag said SCO has found numerous other violations since filing the IBM suit. "We keep finding more stuff every day," he said. "There's (allegedly infringing) code in all the Linux distributions."

"If it were a few lines of code, I'd give it to you," he said.-- Chris Sontag, 2003-06-13

We're not trying to sell the company; we're trying to enforce our rights. We believe that in the marketplace we operate in--just take our UnixWare operating system that competes straight up against Red Hat--if you look at the marketplace over the last two years, there've been 2 million servers shipped into the market. Our UnixWare price tag of $1,500 would have generated $3.5 billion in revenue for us.

The fact that Linux shows up in town and everybody gets excited about it because they get the same sort of value we had with UnixWare but they don't have to pay anything--I get why customers like that. It's the same reason everybody loved Napster--you get CDs for free.

But from our perspective, if you're going to show up and sell against us with a free operating system, then you better have your house in order with respect to these intellectual-property issues.-- Darl McBride, 2003-06-16

"We agree on the point that this case started out as a contracts case against IBM. As of today, it's a different game," McBride said today in a conference call with reporters and analysts.

"SCO's Unix IP has been misappropriated into Linux," he said. "SCO is giving customers [of any Linux distribution] the opportunity to run Linux legally."-- Darl McBride, 2003-07-21

IBM approached us and said "Hey let's do this thing called Project Monterey. Let's go to market together, file this thing with the justice department. Let's create 54% of the market share going into the new millennium." It was all set up and then after the project was all done from a techonolgy standpoint, IBM backed off and didn't go to market with us.

And at the same time they did that, they jumped in bed with Red Hat and went off and started distributing Red Hat.

Now just because they did that doesn't mean -- I mean at one level, yeah we can be upset and we can whine and moan about it -- but that doesn't create technically a legal violation. What creates the violations are when they actually go out and take our code, contribute that into open source that in fact does boost Red Hat. It does boost the other distros. And at the same time our revenue comes down from 230 million down to 60 million. At the same time the Linux marketplace is just booming.-- Darl McBride, 2003-07-21

Right, so what happens here is there's a difference between a distribution of a code base and a donation of code. Because we were distributing Linux does not mean that we had donated code to Linux. In fact the GPL is very specific that it protects users or code developers who have had their code improperly donated into Linux. That is in fact the part that shuts down the GPL. If you have tainted code that's in there you have to in fact stop shipping, if we came out and put a claim against one of the Linux distributors. That's why we haven't done that at this point. If you look at the code that is out there. So we just found out about this a couple of months ago and when we did, immediately we came out and we suspended our shipment of Linux until this gets resolved.

So we're really protected on two fronts. The GPL actually protects us on this front and then if you look at copyright law, copyright law is just as explicit in terms of saying a copyright owner cannot accidentally give their rights away. You have to actually sign your rights away and we have never done that.-- Darl McBride, 2003-07-21

We think that there are a lot of ways that we get justice. Our main thing right now - it's just a little bit like what's going on in the music industry, the film industry. It's very clear in the film industry when the video comes out 2 weeks ahead of the release date of the showing that there's been an infringement. It's very clear with the online music sharing there are problems. They're working through their issues in different ways. We very clearly have problems here. How we work thorugh and get justice to that? We're open to as far as how that works out. Does it happen at an end user level? Does it happen at an OEM level? Does it happen at a Linux distributors level? We're looking at all of those options right now.-- Darl McBride, 2003-07-21

Well, there's no doubt we're not winning the Miss Congeniality contest of the software industry now. But I think if you step back and look at it, in terms of if we really are right with what we're saying, and we're 100% convinced we are and the world is coming around to that. The few dozen people that have come in, taken the time to take a look at our code, take a look at our claims have unanimously walked out of our Lindon, UT offices with the same conclusion that "Yeah you guys do have some pretty powerful claims here." They then turn to "What's next? What are you going to do next?"

So I believe that as our claims are now being validated and as we start to gain wins in this area, I believe that it will turn, it will come back round and people say "Well, OK, there were problems." In the end of the day though, what I would say is we're not trying to kill Linux. I mean we're not attacking Red Hat right now which if we did, by definition, could end up shutting down Linux tomorrow.-- Darl McBride, 2003-07-21

Further lawsuits against other Linux distributors are "a possibility," Sontag said in March, but he added that SCO "believes the majority of our licensees are appropriately upholding their licenses."-- Chris Sontag, 2003-07-21

"Red Hat's lawsuit confirms what we've been saying all along-Linux developers are either unable or unwilling to screen the code" that goes into the Linux kernel, McBride said. "Red Hat is selling Linux that contains verbatim and obfuscated code from Unix System 5."-- Darl McBride, 2003-08-05

"The reality here (is that) IBM and Red Hat have painted a Linux liability target on the backs of their customers," he said. "Due to IBM's and Red Hat's actions, we have no choice but to fight the battle at the end-user level."-- Darl McBride, 2003-08-05

"We will take legal action against any company that violates our intellectual property. We have no fear about going to court as we have nothing to hide. The sooner the court hears and rules on the issues in this matter, the better for us," he said.-- Darl McBride, 2003-08-18

"We're fighting for a right in the industry to make a living selling software," McBride said. "The whole notion that software should be free is something SCO doesn't stand for. We have drawn the line. We're supposed to be excited about that and we're not."

[...] "I would argue that you will come to an understanding that the thing we're fighting for is same thing you're going to be fighting for. If you're a reseller, when the list price [of a Linux product] is zero, the margin doesn't matter. That's where it goes. We are fighting a battle that will have an impact for all of you, for all those with IP."

[...] "This is a huge play around IP," he said. "Globally, it's not just about Red Hat and IBM. There are a lot of issues around IP with music, and in Hollywood. We are in the software industry having these issues and this can have a significant impact going forward. The evidence we have is strong."-- Darl McBride, 2003-08-18

I personally haven't sold any shares [laughter]. Look, Red Hat executives have sold over 500,000 shares just since January. [Other SCO execs] sold shares to offset tax losses but does not know more than that.-- Darl McBride, 2003-08-18

"Even though IBM looks like they're not really involved in it, they're very involved," he said. "From a PR standpoint, they're able to extract themselves from (the dispute), and so they throw Red Hat at us, they throw Novell at us, they have (Open Source Initiative President) Eric Raymond on their payroll. They have all these guys that they fund and then they just step back and watch the fracas go on."-- Darl McBride, 2003-08-21

"IBM has a vast reach to a large number of people in open source. IBM doesn't touch hundreds of thousands directly, but with their strong reach and influence to companies and people in the open source community, in particular Linus Torvalds and Eric Raymond, IBM gets its message out." He goes on to say that "Novell is trying to get in [the attack] by trying to co-coordinating with IBM along with Red Hat and SuSE."

Specifically, "companies have approached me and told me that IBM had tried to get them to stop working with us, even companies that are competitors to IBM. We've also had customers come up and say IBM will penalize us if we keep working with SCO." McBride explains that, for the most part, these haven't been SCO resellers or customers, but mostly software developers. He adds, "We're in the discovery stage and this will be part of the filing and we will show direct information that IBM is the source of some of these attacks coming at us."-- Darl McBride, 2003-08-28

"We believe that Linux infringes on our Unix intellectual property and other rights," SCO's letter said. "We intend to aggressively protect and enforce those rights."

[...] "The business model of Linux distribution is broken; it's like the business model of the dotcoms. Running your company on Linux is like running your company on Napster."-- Darl McBride, 2003-08-28

Immediately, he says, he started thinking about ?how to monetise our assets??ie, Caldera's rights to UNIX. Roughly as apes and humans allegedly have common ancestors, several operating systems can trace their lineage to UNIX, including Linux. Sure enough, says Mr McBride, he soon found ?massive and widespread violations? of Caldera's intellectual property in the Linux code. At a more general level (and surprisingly for a Linux distributor), he found the entire free-software trend ?communistic?, he says: ?We don't get the whole free-lunch thing.?-- Darl McBride, 2003-08-28

"Just because we aren?t ?planning? to sue Linux companies doesn?t mean we won?t. We tried to avoid suing Red Hat, but they seemed to bring the litigation upon us, not us upon them. Also, just because we are saying that we won?t sue Linux companies doesn?t mean that we won?t sue Linux customers".-- Blake Stowell, 2003-08-29

"For one thing [replacing the offending code] doesn't solve the past problems," he said.

Red Hat and SuSe are also "significantly underestimating the size of the problem", said Sontag. "The amount of Unix code in Linux could be greater than 25%."

He also pointed out that only SCO has the right to look at its Unix code and it has no intention of allowing others such as Red Hat to review it.-- Chris Sontag, 2003-09-02

"[While] we are not hellbent on suing someone, we are willing to take that step against any company that is not willing to comply with our copyrights by taking out a license," he said.-- Blake Stowell, 2003-09-08

People ask why we haven't sued Red Hat. We haven't sued Red Hat because then the GPL [general public license] grinds to a screeching halt, and all shipping distributions of Linux must stop. This whole process is going to make Linux and open source stronger with respect to intellectual property. Today, there's no vetting process to make sure the code that goes into open source is clear. We're trying to work through issues in such a way that we get justice without putting a hole in the head of the penguin.-- Darl McBride, 2003-09-11

"We really view Red Hat's suit as being unnecessary," SCO spokesman Blake Stowell said Tuesday. "Our only argument is with IBM; we have no argument with Red Hat, no contracts with them, and we have not made legal threats against them.

"We have only said that we want to protect our intellectual property and that our intellectual property was making its way into Linux," he added.-- Blake Stowell, 2003-09-17

We've certainly tried to handle things in a diplomatic way with many of them [Linux distributors]. One example of this is 5 days before Linuxworld in San Francisco this year, our CEO had what he felt was a good, diplomatic phone call with Matthew Szulik, Red Hat's CEO. They left things in an amicable way and SCO and Darl McBride felt like we were making some progress with Red Hat. 5 days later on the first day of Linuxworld, Red Hat filed suit against SCO. This seemed to fly in the face of the conversation we had with them only 5 days before. It seems that some companies in the industry would rather use deception rather than try and work things out diplomatically, one-to-one.-- Blake Stowell, 2003-10-03

We've certainly tried to handle things in a diplomatic way with many of them. One example of this is 5 days before Linuxworld in San Francisco this year, our CEO had what he felt was a good, diplomatic phone call with Matthew Szulik, Red Hat's CEO. They left things in an amicable way and SCO and Darl McBride felt like we were making some progress with Red Hat. 5 days later on the first day of Linuxworld, Red Hat filed suit against SCO. This seemed to fly in the face of the conversation we had with them only 5 days before. It seems that some companies in the industry would rather use deception rather than try and work things out diplomatically, one-to-one.-- Blake Stowell, 2003-10-03

"I don't think that any company is going to see a lawsuit rolled out to them that hasn't been given an honest and fair chance to purchase a license," he said.-- Blake Stowell, 2003-10-22

MozillaQuest Magazine: But would that not allow a first-level Unix licensee to include "Unix" code and add that into a Linux product that licensee distributes and then consider that combination of Linux-product code and "Unix" code to be a derivative work of the first-level licensee?

Blake Stowell: No, that would be a violation of their UNIX license. A licensee can't use their UNIX license to cover their UNIX work and then try to have that carry over to also cover any Linux business. It only covers their UNIX products. If you take HP as an example, HP-UX is an authorized derivative of UNIX that was developed within the bounds that HP's and SCO's license set, but any Linux distribution that HP distributes with their hardware is considered an unauthorized derivative. Their UNIX license doesn't cover this.-- Blake Stowell, 2003-10-27

Our goal is not to blow up Linux. People ask why we don't go after the distributors...'If you have such a strong case, why not shut down Red Hat?' Our belief is that SCO has great opportunity in the future to let Linux keep going, not to put it on its back but for us to get a transaction fee every time it's sold. That's really our goal.

To the extent that we have to take it down and put it on its back, we're fully prepared and willing to do that.

[...] The last time I checked the CEO was in charge of shareholder value, not standing around the campfire singing Kumbaya with the Linux world. So far, I'm pleased with where we're going..-- Darl McBride, 2003-11-18

"Listen real clearly to what's happening here," McBride said by telephone from his Lindon office in early January. "The situation is that we used to be the leader ... we were where Red Hat [the No. 1 Linux distributor] is now. Linux then comes in, with Red Hat being the ringleader, and really attacks our [UNIX] market share and our marketplace. And they do it by simply taking our value and doing it for free. So, it's really hard to compete with free. And so, then we come back in, and we start looking at this Linux beast, and we looked inside of it, and we realized, 'Hey, wait a minute, this is actually us--this is a substantial amount of our intellectual property showing up inside of Linux itself.' And that's when we got our war paint on and said, 'We gotta go back and take this thing head-on.'"-- Darl McBride, 2004-01-22

"Although the court did not honor SCO's motion to dismiss . . . by ruling that the case should be stayed, the judge recognized that many of the issues in the Red Hat [suit] will be addressed in the SCO v. IBM case."

Stowell said the ruling allows SCO to "concentrate its legal resources toward its case against IBM."-- Blake Stowell, 2004-04-08


Quote database following coverage of SCO, IBM, Red Hat, and Linux
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