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Update: SCO Suspends Distribution of Linux Pending Intellectual Property Clarification

May 15, 2003, 06:02 (95 Talkback[s])

The SCO Group today warned that Linux is an unauthorized derivative of UNIX and that legal liability for the use of Linux may extend to commercial users. SCO issued this alert based on its findings of illegal inclusions of SCO UNIX intellectual property in Linux. The company also indicated that until the attendant risks with Linux are better understood and properly resolved, the company will suspend all of its future sales of the Linux operating system.

"SCO is taking this important step because there are intellectual property issues with Linux," said Chris Sontag, senior vice president and general manager of SCOsource, The SCO Group. "When SCO's own UNIX software code is being illegally copied into Linux, we believe we have an obligation to educate commercial users of the potential liability that could rest with them for using such software to run their business. We feel so strongly about this issue that we are suspending sales and distribution of SCO Linux until these issues are resolved."

SCO will continue to support existing SCO Linux and Caldera OpenLinux customers and hold them harmless from any SCO intellectual property issues regarding SCO Linux and Caldera OpenLinux products.

Going forward, SCO will have a stronger focus on UNIX and the company's growth strategy around Web services, SCOx. The company introduced SCOx in April as the company's Web services framework and plans to introduce new Web services applications from third party developers in August at SCO Forum, the company's annual conference.

"SCO remains committed to servicing our customers and as such, we intend to continue our growth strategy around SCOx-the Web services framework for small-to-medium businesses and branch offices," said Darl McBride, president and CEO, The SCO Group.

In a separate announcement released today, SCO gave guidance on expected results for its 2nd fiscal quarter. The company expects to report net income of $4.0 million on revenue of $21 million.

In addition, SCO today also posted an analyst report from Gartner to their Web site at www.sco.com/scosource entitled, "SCO Lawsuit Sends a Warning to Linux IS Shops." The executive summary of the report asks whether Linux is safe from encumbrances.

SCOSource: Letter to Linux Customers

[Editor's Note: The SCO Group's letter to commercial Linux users is excerpted and linked below. -BKP]

"We believe that Linux infringes on our UNIX intellectual property and other rights. We intend to aggressively protect and enforce these rights. Consistent with this effort, on March 7, we initiated legal action against IBM for alleged unfair competition and breach of contract with respect to our UNIX rights. This case is pending in Utah Federal District Court. As you are aware, this case has been widely reported and commented upon in the press. If you would like additional information, a copy of the complaint and response may be viewed at our web site at www.sco.com/scosource.

"For the reasons explained above, we have also announced the suspension of our own Linux-related activities until the issues surrounding Linux intellectual property and the attendant risks are better understood and properly resolved.

"Similar to analogous efforts underway in the music industry, we are prepared to take all actions necessary to stop the ongoing violation of our intellectual property or other rights.

"SCO’s actions may prove unpopular with those who wish to advance or otherwise benefit from Linux as a free software system for use in enterprise applications. However, our property and contract rights are important and valuable; not only to us, but to every individual and every company whose livelihood depends on the continued viability of intellectual and intangible property rights in a digital age..."

Complete Letter

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