Red Hat rejects SCO claims OSS model "unsustainable"

By Andrew Colley
07 August 2003 12:30 PM
Tags: business, ibm, unix, sco, red, hat, v, system
Red Hat has defended its business model against a claim by the SCO Group yesterday that its dependence on open-source software development was unsustainable in the long term.

The claim was spurred by an impending court battle between the two companies in which the Linux distributor has, among other things, sought pecuniary damages from SCO for making "wrongful" claims to ownership of intellectual property contained in the operating system.

In June, SCO claimed intellectual property rights over of portions code of contained in Linux and recently began maneuvering to extract license fees from commercial users of the operating system. Red Hat escalated the conflict Monday announcing its lawsuit against SCO.

Responding to Red Hat's move, SCO's Chief Executive Officer, Darl McBride, said the Linux distributor knew that its reliance on open-source development exposed it to risk of intellectual property claims against its products.

"That's absolutely not true...we take a lot of care to look at the code. It originally came from the open source community but it's our product," said Gus Robertson, Red Hat South Asia-Pacific's vice president.

However, McBride claimed that Red Hat could not prevent infringing code entering Linux, and if infringing code was found in its distributions of Linux, Red Hat was required to stop shipping them under terms of the General Public License.

"That business model seems unsustainable in the long run and we believe it is the real [weakness in] Red Hat's business. We believe these problems would have surfaced eventually with or without SCO," McBride said.

McBride pointed to documents Red Hat recently lodged with US Securities authorities in which, he believed, that the company had openly admitted to the risk.

Robertson conceded that risk associated with dealing with intellectual property was "more of an issue" under an open-source code development model but said the disclaimer was standard fare for any software company.

"If you had to highlight any risks of any intellectual property-based business--whether it be us [or] Microsoft [or] SCO--there is a risk that somehow, outside your control, other intellectual property gets into your product," said Robertson.

Red Hat wants the court to declare that it has not violated SCO's intellectual property rights and order the group to cease further undertakings likely to "cause confusion" or "deceive" Linux users into believing otherwise.

Undeterred by the legal action, SCO yesterday announced pricing for Unix licenses. SCO is offering an introductory one-time fee of US$699 for a single processor license. However the offer will cease October 15 when SCO intends to increase the fee to US$1,399.

The show must go on

For now, both companies appear set for a lengthy intractable conflict, publicly disputing each others positions point-for-point:

  • Red Hat claims that no Linux distributions contain SCO's intellectual property material--SCO has staked intellectual property claims over Unix System V source code and has bluntly accused Red Hat of distributing versions of Linux containing it.

  • SCO claims that it invited Red Hat to see the code at the centre of the dispute but decided to take legal action instead--Red Hat refutes the claim.

    In the meantime, SCO is trying to elevate discussion surrounding the conflict into higher debate over the Internet's impact on intellectual property.

    "At issue here is more than just SCO and Red Hat," said McBride. "What is at issue is whether intellectual property will have any value in the age of the Internet where IP rights can be simply taken without regard for rightful ownership."

    "Some Linux developers are so comfortable misappropriating Unix code and derivative works that they seem to feel an entitlement to keep doing it," he added.

  • Talkback 1 comments

      It would have been nice if you ...Glenn Thigpen -- 08/08/03

      It would have been nice if you had added that none of SCO's claims have been substantiated. They are making some very wide ranging claims and blustering about suing just about everybody that has anything to do with Linux, but have offered absolutely no proof whatsoever,
      Now they are being taken to court to make them put up or shut up.

      Glenn

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