SCO Linux the pressure mounts

22 January 2004

Roger Bickerstaff, Graham Smith

The Linux legal action by SCO against IBM continues to gather pace. IBM is perhaps starting to gain the upper hand in the action. The court has ordered that SCO present more specific details of the alleged infringements of code owned by SCO by 23 January 2004.

In the meantime, SCO has increased the pressure on its UNIX licensees by issuing formal legal letters requiring a 30 day response. The letters were issued on 18 December 2003, which, given the Christmas break, gives licensees a relatively short period to consider their responses before the deadline imposed by SCO for returns.

SCO has issued two letters to UNIX licensees. The first letter sets out various provisions of the licence agreement, including the requirement for licensees to provide a certification to the licensor (SCO) that the software is being used on the designated hardware and in compliance with the licence agreement. These provisions are relatively common in software licensing agreements but it is not common for licensors to actually require licensees to make a declaration. This is what SCO is now requiring from its licensees.

SCO sets out in its letter in considerable detail a number of questions that it wants licensees to respond to in making their declarations. These include questions relating to the running of versions of Linux which include binary interface code in which SCO claims ownership, evidence that the licensee has put in place appropriate confidentiality protections for the UNIX code for employees and contractors, whether the licensee has made contributions of any of the UNIX code licensed under the licence agreement into Linux or any other UNIX-based software product, and whether the licensee has made any purported assignment of the licensed software into the Linux General Public Licence or otherwise for use in Linux. SCO ends the letter with an aggressive threat that if a "full and complete certification" is not made as required in the SCO letter, SCO "may pursue all legal remedies available to it including, but not limited to, license termination rights".

The SCO threat of possible termination means that the letter must be taken seriously. Indeed SCO may be playing on the likelihood that licensees who would be inclined to take issue with SCO's demands cannot afford to put their UNIX licences at risk by doing so. However, the details required in the SCO letter will be very difficult for a corporate to respond to within the specified deadline. For example, it would be a very considerable undertaking for a corporate licensee to respond in full to the SCO requirement to provide evidence of all of the confidentiality protections for all of its employees and contractors over the term of the UNIX licence.

In order to protect their UNIX licences, licensees who receive a letter from SCO need to comply with the terms of their licence agreements.

They should:

  1. Identify from their internal records and gather together full copies of their UNIX licence agreements.
  2. Review these urgently with their lawyers.
  3. Determine whether compliance with each licence agreement requires a response to SCO's letter, either in the terms alleged by SCO or otherwise.
  4. Determine whether the possible consequences of not responding, or of a non-compliant response, include (as alleged by SCO) termination of the UNIX licence.
  5. Ensure that any response needed in order to comply with the terms of the UNIX licence agreement is provided in time.

The second letter issued by SCO identifies aspects of the binary interface code in which SCO claims ownership and which SCO claims have been incorporated into Linux without its authorisation. In the letter SCO gives UNIX licensees notice that usage of this code will be a copyright violation and that in SCO's opinion any distribution of Linux containing this code, with copyright management information deleted or altered, will also be a violation of SCO's rights under the U.S. Digital Millennium Copyright Act.

Clearly, the issues raised in the SCO letters are complex and could have a significant business impact on UNIX licensees. UNIX licensees should obtain specialist legal advice prior to responding to SCO. Nothing in this summary is intended to give legal advice to UNIX licensees or to any other person who may be affected by these issues.

This Briefing is one of a series on this issue that is being issued by Bird & Bird. As the issue develops further briefings will be issued. For any further information on these issues, please contact Roger Bickerstaff or Graham Smith at Bird & Bird on +44 (0)20 7415 6000.