IBM says Linux indemnification unnecessary

Although Novell Inc., SUSE Linux AG, Sun Microsystems Inc., Hewlett-Packard Co. and Red Hat Inc. are all offering protection or indemnification programs to protect customers from possible legal threats stemming from their use of Linux, industry leader IBM Corp. has quietly remained on the sidelines.

But Wednesday, on the opening day of the LinuxWorld Conference & Expo in New York, IBM publicly weighed in on the issue at a product announcement news conference, arguing that there’s really no need for it to indemnify its growing pool of 6,300 Linux customers. IBM’s rationale: The ongoing US$3 billion lawsuit filed against it last March by The SCO Group Inc. is baseless.

“Our position hasn’t changed,” said Jim Stallings, IBM’s general manager for Linux. “The claims that have been alleged (by SCO) against IBM (have) no basis,” so indemnification is not needed.

Even if customers still have concerns, both major Linux distributions — SUSE Linux and Red Hat Enterprise Linux — have customer protection programs in place to help defend users against legal actions from SCO, Stallings said. In addition, the Open Source Development Labs, a nonprofit enterprise Linux advocacy group, has begun a defense fund that it hopes will bring in US$10 million for users entangled in any related legal fights.

Despite recent legal threats from SCO that it could soon begin suing enterprise Linux users, use of the operating system among businesses has continued to grow, Stallings said. “They voted,” he said of customers who have deployed Linux. “Given what’s there, customers have made up their minds by the thousands” and see SCO’s legal challenge as baseless.

Irving Wladawsky-Berger, vice-president of technology and strategy for IBM, reiterated Stallings’ comments. Wladawsky-Berger said indemnification is unnecessary because no court has yet to rule on SCO’s claims.

“We believe the (SCO) suit has zero merit,” Wladawsky-Berger said. “In our legal system, you’ve got to go to court and get it over with. That’s what we’re doing.

“I know there is a part of the United States that believes that legal issues should be tried in the media,” he said. “But it’s not won in the media. We think the actions we’re taking are the right actions to get these issues behind us.”

Matt Plociak, an analyst at Progressive Strategies Inc. in New York, said IBM’s argument against offering indemnification to its customers makes sense.

“To me, if you offer indemnification, you’re saying there may be a problem,” he said. “IBM is saying there is no problem and (that they’re) going to prove that in court. I think that’s a reasonable strategy, and obviously their customers are confident with that,” because they haven’t stopped buying and using Linux.

Al Gillen, an analyst at Framingham, Mass.-based IDC, said that while IBM continues to pass on indemnification, the company has donated money to the legal defense fund created by the Beaverton, Ore.-based OSDL. “I don’t think there’s any real need to provide any indemnification until they have a customer who’s in some form of litigation” in connection with SCO’s claims, Gillen said. “Then the pressure would increase for them to do something.”

On Tuesday, Red Hat announced the creation of a new Open Source Assurance program that will protect all existing and future Red Hat Enterprise Linux customers from legal challenges as long as they’re using the software. Under the included Intellectual Property Warranty, the company would replace any software code that allegedly infringed on other code, so users and developers could continue to work with the products. Money would be available from the Open Source Now legal defense fund for customers that might be sued for infringement issues.

The Red Hat move comes on the heels of last week’s decision by Novell, which just acquired SUSE Linux, to indemnify SUSE Linux customers against possible legal action from SCO.

When Unix vendor SCO filed its lawsuit against IBM, it alleged that IBM had illegally contributed some of SCO’s System V Unix code to the open source Linux project. Additional suits and countersuits have been filed by Red Hat and Novell since the case began.

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