SCO to take Linux licensing to SMB, international users

The SCO Group Inc. is now making its Intellectual Property License for Linux available to small and medium businesses (SMBs), the company said on Wednesday.

SCO, a Lindon Utah software vendor, claims that the Linux operating system infringes on its intellectual property. Linux users who do not purchase its license are in violation of SCO’s copyright, and could be subject to lawsuits, SCO claims.

The company first began offering the licenses to large U.S.-based companies last August. As of Wednesday, however, they will be available to any business customers in the U.S., United Kingdom, Italy, or France, according to a SCO spokesman.

“Today is really the first announcement indicating that we’re offering it to SMBs and companies outside of the Fortune 1000. Also, we’re beginning to offer it outside of the U.S.,” the spokesman said on Wednesday.

SCO hopes to make the license available in countries such as Japan, South Korea, Taiwan and China by Feb.1, but is not yet certain which countries will be added, the spokesman said. “We’re still doing a review of the legal rules of being able to offer this license in other countries,” he said.

Germany, however, will not be on the list because of a court order that prohibits SCO from “even talking about” its license, the spokesman said.

One industry analyst firm is advising companies against purchasing SCO’s license until the company settles lawsuits with IBM Corp. and Red Hat Inc. that related to its IP claims. “We don’t feel that companies would be advised to pay any license fees until the actual decision of whether there is an infringement is settled in a court,” said George Weiss, a vice president and research director in Gartner Inc.’s server group.

Weiss said that with Intel Corp. and IBM now backing a legal defense fund for Linux users who might be sued by SCO, and with Linux vendors Novell Inc. and Hewlett-Packard Co. now indemnifying their Linux customers, users have other options and are better off avoiding SCO’s attention altogether.

John Ferrell, the head of the intellectual property practice at Carr & Ferrell LLP agreed. “It’s a huge amount of money, and the issue is just not ripe yet for purchasing a license,” he said. “For small companies, what I’m advising my clients to do is just lay in the weeds right now,” he said.

The IP License for Linux is available at an “introductory price” of US$699 per server processor; or US$199 per processor for desktop users, SCO said. SCO would not say how long this pricing would be in effect, but pricing will double after the introductory period, the SCO spokesman said.

A fee of US$3 per processor license would be in line with industry standard rates for such licensees, provided SCO’s claims proved true, Ferrell said. “The overall value of the code that’s being infringed is small enough that the damages wouldn’t be that great,” he said.

Because Novell also claims copyright on the Unix System V source code, it isn’t even clear right now whether SCO actually owns the copyright to Unix, Ferrell said.

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