LINUXWORLD : Red Hat files complaint against SCO

Red Hat Inc. has filed a complaint against The SCO Group Inc. with the aim of showing that Red Hat technologies do not infringe on SCO’s intellectual property and to hold SCO accountable for “unfair and deceptive actions.” Red Hat announced that it has filed a lawsuit against SCO in U.S. District Court for the District of Delaware at a press conference Monday apparently timed to coincide with the LinuxWorld conference in San Francisco.

Red Hat is seeking a declaratory judgment from the district court that would rule SCO’s claims regarding copyright infringement are untrue.

Red Hat, which is based in Raleigh, N.C. also has established the Open Source Now Fund, which will cover legal expenses associated with infringement claims against companies and developers of open source software under the GNU General Public License. The legal defense fund covers open-source software generally and not just the Linux operating system, Red Hat said. Red Hat pledged US$1 million to the fund.

The court action is being taken to bring facts into the open and to stop “innuendo” spreading as a consequence of SCO filing a US$1 billion lawsuit against IBM Corp. in March, alleging that IBM breached a Unix licensing agreement and stole trade secrets. SCO contends that IBM is illegally using Unix code in its Linux services business.

SCO, based in Lindon, Utah, then announced it was dropping its Linux business and warned commercial Linux users that they could be liable for intellectual property violations, setting off fury in the open-source community.

“For the past two months, we have listened to innuendo and rumor and unfounded claims that have been launched against our customers, in face-to-face meetings with investment analysts (and) in face-to-face meetings with other industry analysts, regarding the unfounded claims associated with Linux and the Linux industry,” Matthew Szulik, chairman and chief executive officer of Red Hat, said at the news conference.

“In a recent conference call, Red Hat was mentioned specifically by name and threats were launched on behalf of the SCO organization against the entire Linux industry,” he said. “We’ve been patient. We’ve listened. But when our customers, the whole open-source community (and) our investors are now threatened with these unfounded claims and innuendo and rumor, it’s time to act.”

Red Hat sought without success to work with SCO management to resolve the issue, Szulik said, and brought the lawsuit to settle the matter quickly. In its court filings, the Linux vendor claims that SCO failed to respond to a July 18 request to explain the basis of its claims, “except to make a telephone call seeking to have Red Hat pay for an unneeded Unix license,” according to Red Hat’s complaint.

In response to Red Hat’s charges, SCO reiterated its claim that Linux is an unauthorized derivative of Unix and denied that it was attempting to spread fear, uncertainty and doubt to end users. “We’re confident of our claims, and we’re happy to address any of the allegations that are found in this current lawsuit,” said SCO spokesman Blake Stowell.

Stowell disputed Red Hat’s version of events, saying SCO CEO Darl McBride left the telephone conversation thinking he had an agreement to meet and conduct further discussions.

The seven-count complaint asks for a declaratory judgment that no Linux version sold, used or distributed by Red Hat, or used by Red Hat’s customers, infringes SCO’s intellectual property rights. It also seeks a declaratory judgment that Red Hat’s use and sale of Linux and its use by the company’s customers doesn’t misappropriate SCO trade secrets.

Other counts allege false advertising in SCO’s comments about Linux, deceptive trade practices that are causing “irreparable harm” to Red Hat, unfair competition, interference with prospective business opportunities, trade libel and disparagement of Red Hat’s products, services and business practices.

Red Hat is seeking a permanent injunction restraining SCO from acting to cause confusion or make purchasers, business partners and investors believe Red Hat’s products violate SCO’s intellectual property rights or trade secrets. It also seeks actual damages from SCO’s actions, in an amount to be established at trial, and three times those damages based on Delaware’s Deceptive Trade Practices Act.

Though Red Hat hasn’t been able to quantify the impact of SCO’s statements, it has seen customers delay purchases, Szulik told reporters after the news conference.

Red Hat plans to seek contributions to the Open Source Now Fund from other Linux vendors, he said. The fund could be used for Red Hat’s defense or the legal costs of any other Linux vendors or commercial developers that face suits over the issue.

The fund won’t be available to customers, Szulik said. As a matter of policy, Red Hat doesn’t indemnify its customers for legal challenges concerning its software, according to the company.

Red Hat’s response was precipitated by SCO’s decision to move the focus of its complaints from IBM to Linux developers and users, said Sageza Group Inc. analyst Charles King. “Claiming that Linus Torvalds might be personally responsible for some of this, you’re starting to get into an area where you’re impacting the livelihood and the business of companies like Red Hat and SuSE (Linux AG),” he said.

This broadening of its claims may expose SCO to a class action lawsuit on behalf of Linux developers, said open source advocate Bruce Perens. “There are tens of thousands of us. We are a viable class for a class action suit,” he said. Perens said that he would consider the rights to the original source code an appropriate damage settlement in such a suit. “I really like the final irony of SCO having to give up its copyrights, and I think I might pursue it,” he said.

After his forceful statements at the hastily arranged news conference, Szulik acknowledged to reporters that he takes SCO’s challenges personally.

“For me as the CEO of the Linux leader not to take this personally, I would be lying to you if I told you I didn’t,” he said.

Visit for more information. SCO Group is online at

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