A recent court decision may have shut down the case against Novell and IBM for good, but legal issues around open source may be par for the course

Linux experts look for lessons from SCO suit

The SCO Group’s copyright case may have done little to discourage enterprise Linux use, but the next generation of legal conflicts around open source have only begun, experts said Monday.

A U.S. district court judge ruled late last week that SCO does not own the copyrights to the Unix operating system, undermining its cases against both Novell and IBM Corp. SCO had sued IBM for unfairly using parts of the Unix code in Linux, and later sued Novell when it asserted that it was the rightful owner of the Unix copyrights. Although the cases have been working their way through the courts since 2003, Friday’s ruling was seen by many as the death-knell in SCO’s legal fight.

The SCO lawsuits raised a number of questions around whether companies using Linux might become liable to third parties who staked a claim on the intellectual property underpinning it. At the time, IBM, HP and others offered clients indemnification against any such legal action, but SCO had a number of high-profile backers. These included, indirectly, RBC Capital Markets, which funded a private placement by BayStar Capital in San Francisco of non-voting Series A Convertible Preferred Shares in SCO, which the latter used to pay its legal and licensing costs.

“This removes one aspect of uncertainty and doubt around open source. I don’t think it stopped that many people from adopting it, though,” said Mike Gifford, principal of Open Concept Consulting in Ottawa. “I haven’t been all that concerned about what its implications are going to be.”

Four years ago, the SCO threat seemed serious enough that a software professional named Shad Young, also in Ottawa, formed a group called the Canadian Linux Interests Coalition (CLIC) to defend local members of the open source community. Young, however, said CLIC soon lost momentum after he got the ball rolling.

“It got political very quickly,” he said. “I think in the end (SCO’s lawsuit) was a non-threat. It was annoying, and for most people it was just a rally call to look at our own internal copyright issues.”

Barry Sookman, a partner and head of the technology law group at Toronto-based McCarthy-Tetrault, said most companies still aren’t looking at those issues closely enough, and that open source licences are not put to the robust legal test of their commercial counterparts.

“The terms of many of them are ambiguous. A lot of times they’re more of a philosophical document than a precise legal document,” he said. “While the overall goal is understood, the actual application of those documents to complex transactions is very problematic. SCO is one big example of an issue, but there are many latent examples.”

While the SCO case was quite specific and probably wouldn’t spawn copycat suits, The Strategic Counsel software analyst Warren Shiau said the patent cross-licensing deals between companies like Microsoft and Novell may be a different story.

“I could foresee that becoming an issue, but more in the sense of certain vendors not being in complete accord or agreement with what the deal evolves to,” he said. “They take things in a certain direction where proprietary vendors who are pushing open source or Linux can’t quite work with that and maintain their commercial agreements.”

Most companies don’t have the wherewithal to do patent searches when they deploy open source software, Sookman said, but that doesn’t mean they won’t get caught off-guard one day.

“There may be a test case that one or more (copyright) owners may take, but I think it may be a more prominent defendant. It’s not going to be a little guy,” Sookman said.

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