Meet Linux's New Public Enemy No. 1


Darl McBride is a man with a bulls-eye on his back. The CEO of SCO Group, McBride is the target for vitriol and venom from an enraged community of Linux developers. His offense? SCO filed a $1 billion suit against tech behemoth and Linux darling IBM in March. The suit alleges that Big Blue violated licensing agreements with SCO. McBride's company holds the original intellectual-property rights to Unix, the still-popular but fading proprietary operating system used to run powerful corporate networks.

SCO (SCOX) claims that IBM (IBM) contributed big chunks of sophisticated software code to the collaborative Linux open-source operating system at the expense of Big Blue's flagging version of Unix, which is called AIX. IBM did this, SCO claims, in order to stimulate its soaring Linux consulting and installation businesses, even if it meant gutting AIX.

This curious case has more than a whiff of fratricide. Until recently, SCO was better known as Caldera, a Linux supplier and member of the United Linux alliance of open-source software companies that pushes a unified standard for Linux installations. McBride, though, says Linux makes up only a very small part of his business and that his Unix revenues are growing.

Whatever the case, the open-source community has reacted violently to the suit. Recently, hackers launched a denial-of-service attack on SCO's Web site. Tensions rose even higher after Microsoft (MSFT), a foe of both Linux and IBM, bought an SCO Unix license. That sparked rumors that Bill Gates was planning to purchase SCO and its Unix rights in order to put a thumb in the eye of the Linux community (See Bw Online, 5/23/03, "Microsoft vs. Linux Takes a Weird Turn").

IBM has denied the charges in SCO's suit and has said it plans to vigorously contest the case. Certainly, McBride has a rough road ahead, since proving improper distribution of licensed software code is fiendishly difficult. BusinessWeek Online Technology editor Alex Salkever spoke to McBride about the situation on May 21. Following are edited excerpts of their conversation:

Q: What was it that pushed you to the point of filing suit?

A: The tipping point for us was at Linux World this year, when an IBM executive stood up in front of a large crowd and essentially said, "We're moving our AIX expertise into Linux, and we're going to destroy the value of Unix."

Those comments alone would have been a direct violation of our AIX contract with IBM, under which they license our Unix intellectual property. That's what caused us to start digging [to] find out what was going on. And the deeper we dug, the more we found. When we tried to resolve things with them, we reached an impasse. This lawsuit is the final extension of the negotiating process.

Q: Why have you not chosen to pursue these types of claims against other companies that develop both Unix and Linux? For example, Hewlett-Packard (HPQ) has a massive open-source program, but they also sell their own Unix distributions.

A: Our feeling is that if our intellectual-property rights have been violated, then all parties need to recognize that and work out some form of compensation or action. The majority of other vendors are stepping up in a positive fashion.

We want to protect our rights, but our goal is not to litigate with anybody. In IBM's case, they came back and said, "If you go down this path, we are going to disengage. We are not going to do any more business with you, and we are going to encourage others not to do any more business with you." That was in fact what happened. The impact was immediate and swift. No doubt, we lost some business and some revenue.

Q: You said the more you dug, the more you found. What kinds of things did you find?

A: In the last 18 months, we found that IBM had donated some very high-end enterprise-computing technologies into open-source. Some of it looked like it was our intellectual property and subject to our licensing agreements with IBM. Their actions were in direct violation of our agreements with them that they would not share this information, let alone donate it into open-source. We have examples of code being lifted verbatim.

And IBM took the same team that had been working on a Unix code project with us and moved them over to work on Linux code. If you look at the code we believe has been copied in, it's not just a line or two, it's an entire section -- and in some cases, an entire program.

Q: What does this mean for the future of SCO and its involvement in the Linux community?

A: We would be happy to sit down and get a resolution on this so we can all live together peacefully. But when we file a legal claim and then someone does a denial-of-service attack on our Web site to try to shut us down, it creates concerns for us as to how can you work with this community.

Q: Microsoft just purchased a Unix license from you. What's significant about that?

A: They agree with our approach to intellectual property. They've taken a patent license on our technology to build better integration between Unix and Windows. I believe that sends a statement to others with respect to what it means to honor intellectual property.

Q: Some people have said this is a maneuver to help SCO get purchased by a larger company.

A: That's not the direction we are trying to take. Our company has been doing better. We preannounced earnings for our next quarter...of $4 million in net income. We have a pipeline of revenue that's going to be showing up in coming quarters. We're perfectly fine going down an independent path.

Q: Some people have speculated that Microsoft is planning on purchasing you.

A: We have not had any discussions along those lines. If they are, they haven't told us about it.

Q: When I talk to some people in the open-source community, they say this is an attempt to overturn the way the community works. How would you answer them?

A: I believe the way the open-source community works right now has some fundamental flaws that have got to be addressed. We need to address how this open-source intellectual property is developed, routed, and sold. Thousands of software developers send code to contribute to open-source projects -- but there isn't a protective device for the customer using the software to ensure they're not in violation of the law by using stolen code.

Basically it's a "buyer beware" situation. The one holding the hot potato is the end-use customer. If the process can't provide more guarantees for customers, I don't think it will pass the long-term test at the customer level. You need some comfort level other than "We can warrant none of this, we don't know where it came from. And because you got it for free, you shouldn't complain about it."


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