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You’ve definitely heard of IBM. You’ve probably heard of Linux. You probably haven’t heard of Richard Stallman. And there’s virtually no chance that you’ve heard of a company called SCO. Now’s the time to meet them. A new lawsuit is roiling the world of computers — which, these days, ultimately means the whole world — and they are its cast. In essence (follow the bouncing ball), the SCO Group is suing the IBM Corp. for putting SCO’s proprietary computer code into Linux, the core of certain computer operating systems, which is governed by a licensing agreement written and promoted by Stallman, the point of which is to make software code freely available to all. SCO’s case weaves together threads of computer code, copyright and licensing law, and geek history. Like the Microsoft antitrust case and the Napster copyright litigation, this one potentially could change the face of computing. It could give wings to the increasingly popular Linux and its penguin logo, and prove the viability of Stallman’s innovative license (known as the GNU General Public License, or GPL). Or a court might decide that Linux computer code is too tainted for legal distribution, and that Stallman’s GPL is worth less than the computer bytes it’s written in. The future of free software itself may not be in play — devotees of the idea pervade the Web. But the viability of free software as an alternative to mainstream programs may well be on the line in SCO’s lawsuit. IT IS WRITTEN First, some geek history: Unix, a computer operating system, was invented by AT&T in the late 1960s and early 1970s. Over time, it became the de facto standard for the big computers then used in government, business and academia. AT&T licensed its software fairly widely. (It did this at least in part because of government regulations that restricted its ability to make money from nontelephone projects.) Today, Sun Microsystems, the Hewlett-Packard Co. and IBM all distribute proprietary descendants of AT&T’s creation. As Unix became more popular, various computer programmers and researchers wanted to harness its functionality without its hassles — i.e., they wanted code that worked better and intellectual property strings that were looser. So they started writing programs that acted like Unix, but that didn’t include AT&T’s actual code. Perhaps the most important effort centered on the University of California in the 1970s. Those involved in the project, called Berkeley Software Distribution (BSD), collaborated with AT&T for decades. Another key effort was launched by Richard Stallman, formerly a Massachusetts Institute of Technology researcher, who in the 1980s started a project to write a Unix act-alike without any AT&T code. He dubbed his version GNU, short for “GNU’s Not Unix.” And, in the early 1990s, Linus Torvalds in Finland began yet another effort to build a Unix-like core, or kernel, of an operating system to run on Intel processors. Torvalds’ work, to which many others contributed, became widely known as Linux. (Stallman, who often notes that parts of these operating systems other than the kernel contain substantial amounts of GNU code, prefers to call them GNU/Linux systems.) Along with the technical evolution of all these Unix variants came a legal innovation, originally pushed by Stallman: the idea that software should be freely available to all. According to Stallman’s aptly named group, the Free Software Foundation, users should have the right “to run, copy, distribute, study, change and improve” software. The premier achievement of the Free Software Foundation is the GNU General Public License, which Stallman first wrote in 1989. The purpose of the GPL is to ensure that all computer code licensed under it remains open for everyone to see and modify. Anyone who tinkers with and distributes code licensed under the GPL must agree to make their modified code available under the same license. The GPL doesn’t require that the software be available at zero cost — although GPL’d software often is. Eventually, AT&T wanted out of the Unix business. In 1993, it sold its Unix rights to Novell Inc., which, in turn, sold some or all rights (depending upon whose story you believe) to SCO in 1995. (SCO is, as their marketing folks put it, “a provider of software solutions” for small and midsized companies. Based in Lindon, Utah, it’s the successor to a merger of two firms, Caldera Systems and Santa Cruz Operations.) When it still owned Unix, AT&T had licensed the code to IBM, which proceeded to develop its own variant of proprietary Unix, called AIX. According to SCO, it also worked with IBM to write Unix code for Intel processors, even after SCO bought the Unix rights. Meanwhile, over the last five or so years, IBM has also promoted and backed Linux, with the goal of making money by selling services (rather than software) to its customers. Or, as SCO states in its pleadings, “To accomplish the end of transforming the [business] enterprise software market to a services-driven market, IBM set about to deliberately and improperly destroy the economic value of Unix and particularly the economic value of Unix on Intel-based processors.” And then, according to SCO, IBM did worse: It started to release huge portions of its AIX Unix version under the GPL. ARE YOU LICENSED? This March, SCO sued. It claims billions of dollars in damages for misappropriation of trade secrets, breach of contract and licensing agreements, interference with contract and unfair competition. According to one of SCO’s filings: “Prior to IBM’s involvement, Linux was the software equivalent of a bicycle. Unix was the software equivalent of a luxury car. … It is not possible for Linux to rapidly reach Unix performance standards without the misappropriation of Unix Code … and coordination by a larger developer, such as IBM.” IBM’s efforts, according to SCO, deprived the latter company of a market in which to sell operating systems for enterprise-level computer systems on Intel processors. SCO also purports to have revoked IBM’s license to use Unix code in the AIX system. Upping the ante further, SCO sent letters to commercial Linux users, asserting, “We believe that Linux is, in material part, an unauthorized derivative of UNIX.” SCO is encouraging Linux users to buy licenses for as much as $4,999. In August, Red Hat Inc., a large commercial distributor of Linux, sued SCO for a declaratory judgment that Red Hat is not using SCO’s code. Microsoft, on the other hand, paid SCO a rumored $10 million for the rights to any SCO code that it happens to be using. SCO has not publicly disclosed all the sections of code that it says IBM pilfered. But Mark Heise, a partner in the Miami office of Boies, Schiller & Flexner, which represents SCO, told CNET.com in August, “If this case were just about 80 lines of code … there wouldn’t be a lawsuit.” IBM countersued, launching a raft of charges and defenses. IBM claims, for instance, that SCO is violating four of IBM’s patents. It also asserts that it previously entered into an agreement with Novell and one of SCO’s predecessor companies for the “irrevocable, fully paid-up perpetual right to exercise all of its Unix rights.” And then IBM tipped what might be its trump card: IBM claims that SCO itself released Unix code under the GPL. Caldera, one of SCO’s predecessor companies, was in the business of writing and releasing Linux code. And a Web site associated with SCO said, as late as September, that “SCO has contributed several Linux kernel enhancements.” IBM essentially claims that SCO can’t with a straight face accuse IBM of going public with the secret sauce when SCO has also released the recipe. Still more damning, according to IBM, is that SCO continued to release Linux code under the GPL even after filing suit against IBM. Further, says IBM, SCO violated the terms of the GPL by bringing suit against IBM, and therefore has no right to continue distributing any of the code that it had previously released under the GPL, even if the code had initially been SCO’s own. All this has prompted SCO to try to play its own trump — it has targeted the GPL itself. In an Aug. 14 interview with The Wall Street Journal, Heise, the Boies Schiller lawyer, said that SCO would challenge the legitimacy of the GPL on the basis that federal copyright law pre-empts the GPL’s restrictions. Those are the facts so far. The first thing to note is how complicated they are. A convoluted history of distributions and mergers has produced dozens of variations on Unix. There is a cluster of officially licensed and certified Unix products; the Open Group, which holds the Unix trademark, lists over a dozen companies that distribute versions of Unix. There are at least as many Linux systems. There are GNU systems (running with or without Linux kernels). There are at least four BSD systems, both proprietary and public. And still there’s more entangling of software code and legal rights. Plus, these further twists could have a huge impact on SCO’s suit against IBM. In 1992, AT&T (and later Novell) sued the University of California for unauthorized distribution of Unix. Over the prior two decades, BSD had rewritten most, but not quite all, of AT&T’s Unix code (under license from AT&T). The result of the lawsuit was a 1994 settlement, in which the university agreed to rewrite a few files, but then was in the legal clear to distribute the BSD code as it wished. The university then established its own permissive license for the software, which gives anyone the right to take and do with it as they please (even making it proprietary) so long as proper credit is given. Because the BSD code has been legally open for public inspection and modification for almost a decade, SCO could have a hard time proving that IBM released SCO’s proprietary Unix code rather than BSD’s open code. This might be a very real problem for SCO. In an August interview on eWeek.com, Linus Torvalds claimed that at least some of the code that SCO is claiming as its own actually comes from BSD. AT THE CREATION Key to the development of the SCO-IBM litigation, and the development of Linux, is the GPL. What the GPL does, in essence, is allow for widely distributed, collaborative creation of software without the backing of a single, centralized institution. Because the source code of computer programs under the GPL must be available for public inspection, programmers can read it and modify it, and then offer those changes up to others to take or leave. Without the GPL, it would be much harder for programmers to ensure that their work (and derivations of it) stayed freely accessible. If a writer put his code into the public domain with no restrictions (or offered it under the BSD license), another person or company could grab it, modify it, and then keep the changes secret, depriving other programmers of the chance to use the altered code as a platform for still more changes. The GPL bars that from happening. As a result, the GPL acts as an engine to push Linux and other free-software projects forward. What makes the SCO-IBM case significantly different from other seminal cases in the great computer/copyright clash is that, largely thanks to the GPL, there are intellectual property claims on both sides. In the Napster case, for instance, the question at bottom was whether one party was distributing proprietary material without permission. But here, both sides are making claims of improper distribution: SCO claims that IBM grabbed its code and showed it to the public, and IBM claims that SCO is taking code freely licensed under the GPL and trying to lock it up. For interested observers, choosing between two protectors of IP rights is not a slam-dunk proposition. One consequence is that SCO hasn’t received widespread support from business. Heise of Boies Schiller says, for instance, that he has not had offers from companies clamoring to write amicus briefs supporting SCO’s position (though he adds that it is still too early in the litigation process to think about amicus briefs). Perhaps more striking is the fact that the Business Software Alliance, which has taken an extremely aggressive stance in pursuing software infringement claims in other contexts, is sitting this fight out. (Of course, the group’s stance might also have something to do with the fact that IBM is a member, while SCO isn’t.) STRANGE BEDFELLOWS Another reason for the apparently lukewarm reception of SCO’s suit might be Linux’s increasing penetration into the world of business. It’s not merely that large companies rely on Linux more and more for their computer needs. It’s also that software companies themselves often wear two hats when it comes to free software. For instance, Sun, like IBM, distributes both Linux and its own proprietary Solaris system. And Apple Computer Inc. sells an operating system that’s a hybrid of free software and proprietary code. Linux is also making deep inroads into other areas such as consumer devices that run stripped-down operating systems. Linksys, one of the most prominent manufacturers of wireless networking hardware and a division of Cisco Systems Inc., runs its devices on Linux. Motorola Inc. and Phillips also use Linux for products such as mobile phones and remote controls. And over the last couple of years, many companies have become more comfortable with the idea of selling proprietary software that runs on top of a Linux foundation. According to a paper written last year by Matt Asay (now a lawyer at Novell, then a student studying under cyber-guru Lawrence Lessig at Stanford Law School), “the closed-source world came to understand the GPL, and that it was not locked out of linking to Linux.” Companies that have realized that, and others thinking of following their lead, have little incentive to join up with SCO — and a lot of incentive to see themselves in IBM. The Business Software Alliance takes a diplomatic stance. “We don’t have a position on any particular software development model,” says Jeri Clausing, an alliance spokesperson. A NOVEL COPYRIGHT Besides the tangled threads of history and commerce, the legal threads of the lawsuit can be a bit hard to tease out. Interestingly, SCO never directly raises a simple copyright infringement claim in its complaint. But that’s probably just a matter of time: On July 21, SCO announced that it has completed U.S. copyright registrations for its UNIX System V source code, which SCO ominously called “a jurisdictional pre-requisite to enforcement of its UNIX copyrights.” Even as it stands, the SCO-IBM case has copyright at its core. Just look at the GPL on which IBM relies for its defense. The GPL explicitly states, “We protect your rights with two steps: (1) copyright the software, and (2) offer you this license which gives you legal permission to copy, distribute and/or modify the software.” SCO’s argument is also based in copyright law: that the federal scheme trumps the conditions set forth in the GPL. However, it’s unclear exactly what theory of copyright the company is pursuing. According to the August article in The Wall Street Journal, Boies Schiller’s Heise has at least hinted that SCO’s position might be grounded in Section 117 of the Copyright Act. That provision essentially states that there is no violation of copyright law when “a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine,” or when a computer makes a copy for limited archiving purposes. According to the Journal, it is SCO’s position that the GPL violates copyright law by allowing software users to freely copy software for any purpose. In a Legal Times interview, Heise declines to embrace the Section 117 theory. He says that SCO is not yet relying on any specific clause of the Copyright Act, but is considering the statute from a macro perspective. “It’s the [Free Software Foundation] that’s focusing on Section 117,” Heise says. “I just made a general statement that our position is that the GPL is pre-empted by copyright law.” (As this article went to press, SCO had not yet elaborated on its copyright theory in any filings in the case.) But whatever copyright theory it pursues, SCO has left critics scratching their heads. Duke Law School professor James Boyle, who is working on a book about the public domain, opines, “I’d have to see that argument worked out in greater detail, because as stated it seems simply ludicrous.” Columbia Law School professor Eben Moglen, who is also general counsel for the Free Software Foundation, has written that SCO’s claim that copyright law trumps the GPL is so broad an argument that it would invalidate all software licenses, even those for which people pay, even for proprietary software. That doesn’t mean that the GPL is necessarily in the clear. Its legitimacy has never been upheld (or struck down) in litigation. Moglen insists that’s because the GPL is just a straightforward license. Whenever he has encountered violators, he has been able to settle easily based on its strength. “There’s no lawsuit [on the books],” says Moglen, “because there’s no enforcement problem.” At the same time, while the GPL relies on straightforward licensing law for enforcement, it also puts the law to such a novel use — ensuring that software is broadly available and open for modifications — that lawyers can have trouble understanding it. “Because we don’t use shrinkwrap,” notes Moglen, “people say, ‘Wait a minute.’ “ Judges, of course, might say the same thing. WORM AT THE CORE? Even assuming that the GPL itself holds up, there’s a more fundamental problem facing IBM: What if all the Linux code at issue isn’t clean of copyright problems? This, of course, will be the painstaking focus of the litigation. It will require going through the code line by endless line to see what SCO claims is its own code, what SCO released itself under the GPL, what was released under the BSD settlement, and what IBM might have released without permission. That’s a daunting project (depending on how you count them, there are hundreds of thousands to several million lines of code in the Linux kernel). But say that IBM wins this fact-based dispute. Even then, SCO’s lawsuit still illustrates a potential problem for Linux and other open-source software projects. What’s to stop another plaintiff (say, Sun) from claiming that its proprietary Unix code has been dumped into Linux without its permission? In one sense, this is no more of a potential trap for Linux than for any other software. If IBM hires a programmer from Hewlett-Packard, there’s a possibility that the programmer will insert some of Hewlett-Packard’s copyrighted code into IBM’s programs. And other IBM programmers won’t necessarily recognize this, because proprietary code is usually a well-kept secret. But the problem seems to be larger for Linux, if only because more people — a world of hackers connected by the Internet — collaborate on its development. Any of them could, accidentally or deliberately, slip something into the code. One partial solution — to have companies that distribute Linux indemnify their customers against lawsuits — is fine in theory. Whether those companies could afford the costs would seem to be another question. And it might drive them to place greater restrictions on further development of Linux, rather undercutting the whole point of the project. (IBM and Dell Inc., for instance, have declined to offer indemnification, while Hewlett-Packard announced in September that it will. But Hewlett-Packard won’t extend that indemnification to customers who modify the Linux source code.) Because of lawsuits like SCO’s, there’s a real question whether businesses going forward will be eager to use Linux without such indemnification. There’s also a significant question whether Linux will continue to expand its user base without businesses to act as Linux customers and partners. WHITHER THE PENGUIN? That said, even if Linux fails to expand its business base, that doesn’t mean it will die. In the Linux community itself, there’s some real ambivalence about industry’s involvement. Specifically, there’s fear that the purity of the idea inevitably gets corrupted by business’s search for profits. Stallman has criticized IBM for loudly proclaiming its support for Linux while also developing proprietary programs to run on top of Linux — rather than dedicating itself completely to free software. So less commercial interest would not upset everyone who uses Linux. Should IBM and Linux lose here, there’s also the international community to consider. Linux arguably has more of a following outside the United States than in it, and foreign courts might not view the GPL, or SCO’s claims about its code, the same way as American courts did. (On the other hand, a recent German paper suggests that the GPL’s failure to properly address liability renders it invalid under European Union law.) Keep in mind, too, that for any violations a court finds, Linux programmers have said that they are ready to rewrite the offending code. That doesn’t mean that IBM or Red Hat will still want to distribute it, but, with the Internet, there’s no absolute need for their participation. Linux doesn’t require centralized distribution to function. Just ask anyone still sharing music on the Web after Napster lost its case. On the other hand, less-regularized distribution channels and support services could slow the adoption and evolution of Linux. Many potential users, individual and business, want the reassurance of known sources. And software that shares songs isn’t as critical as software that runs your computer. Speaking of Napster, there’s one last thing for observers to consider. The lead partner at Boies Schiller, the law firm representing SCO, is the much-admired litigator David Boies. He represented Napster in its legal battle with the recording industry, and he represented the federal government in its antitrust case against Microsoft. He won the Microsoft case (more or less) and lost the Napster case. That makes him one for one on recent big tech disputes. Boies’ partner Heise says that the firm didn’t seek out the SCO litigation; rather, the company knew that it wanted David Boies. On the other side of the case, representing IBM, is New York powerhouse Cravath Swaine & Moore, where Boies used to work (maybe most notably when he represented IBM against federal antitrust claims in the 1980s). So it’s not just the law of the SCO-IBM battle that should be interesting, but also the lawyering. Sit down, boot up a Web browser on your favorite computer operating system, and watch them fight over the future direction of software.

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