SCO
vs. IBM: Status Report
June 13th, the deadline SCO
imposed on IBM to negotiate a settlement for what SCO claims is
IBM’s improper use of SCO’s UNIX in its AIX code and in Linux
has come and gone.
Although SCO’s PR folks assured us
yesterday that nothing would be happening, by day’s end on June 16th,
SCO had announced that it was terminating IBM’s UNIX license for
breach of contract (the contract that IBM signed with AT&T in
1985 and SCO inherited) and that it was illegal for IBM to ship
copies of AIX or for customers to continue to use AIX.
SCO then proceeded to amend its legal
complaint in two interesting ways, which are very telling:
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Demand
For A Share Of IBM AIX Revenue
SCO claimed that IBM would now owe it a
percentage of the revenue IBM earned from AIX (hardware, software,
and services), from June 16th until the matter was
settled, implying that the longer it took to take this through the
courts, the better, since the sum would only be larger.
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Permanent Injunction Not Temporary
Injunction
SCO filed for a permanent injunction
against IBM. This is
very interesting since it would be more common to file for a
temporary injunction which could, if granted, provide immediate
relief. Permanent
injunctions aren’t generally granted until the case has moved
through the courts and is found in the plaintiff’s favor –
which, in this case, could take years.
But to get a temporary injunction
requires several conditions SCO was probably unable to meet (we’ve
consulted several lawyer friends in an attempt to sort this out).
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SCO would have to prove that it was
going to suffer immediate and irreparable harm if the
injunction was not granted.
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SCO would have to offer solid proof that
IBM was the cause of this harm.
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The court would require SCO to post a
bond equivalent to the value of the loss to IBM.
IBM does more than $3 billion a year of AIX business
plus its Linux business so we’re talking more money than SCO
could possibly have access to.
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And Now What Happens
What’s likely to happen now is more or
less what we expected all along.
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IBM and SCO will go to court and set a
schedule for discovery (the exchange of information and the
taking of depositions). In
a case of this magnitude this will take considerable time.
Large companies can, of course, afford to be painstaking
about this, expending as much time and money as they feel is
appropriate. However,
in this particular case, IBM is likely to want to have this
situation end as quickly as practical.
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While that is happening, the market will
do what the market does. It
is likely to continue to largely ignore this law suit.
We’ve interviewed IBM, IBM customers, two Linux
distributions and some Linux customers about customer reaction.
All agreed that customers expect IBM to sort this out and they
were unconcerned (although, in some cases, annoyed).
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SCO has hinted that it might try to
audit IBM’s customers to see how much AIX they have and are
using. If that
occurs, we suspect that IBM might encourage some of those
customers to sue SCO. Of
course, so far, SCO has claimed that its disagreement is with
IBM and not with users, but then why has it sent a threatening
letter to Linux users, suggesting they seek legal advice about
their use of Linux (which occasioned the German government to
seek and receive a court order against it), and hint at AIX
audits?
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IBM has mentioned recently its
investment, over the years (nearly 20) in improving its AIX
version of UNIX. They
mentioned “hundreds of millions of dollars and many
patents.” Should
we mention that one of the ways this type of law suit is often
settled is when the party being sued piles up its patents, finds
numerous counter-infringements, and offers to cross-license in
exchange for calling it quits?
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If the Linux market is damaged by the
disruption of this law suit (and I don’t think it has been
yet, except at the noise level), then I wonder if a
representative of that community might not attempt to gain legal
standing in the suit and file counter-claims for damages.
There are lots of candidates ranging from the Linux
distributions, to large Linux customers (especially
governments), to prominent representatives of Linux such as
Linus Torvalds, Eric Raymond, and Bruce Perens.
Competitive
Reaction
The game, of course, goes on.
One unattractive thing that is about to occur is that some of
IBM’s competitors see this as a marketing opportunity, rather than
a disruption to the system as a whole.
So Sun has decided, apparently, to tell
customers that it’s not safe to buy UNIX products from IBM but
that it will be glad to take that business, since its UNIX license
from SCO is “safe.”
Sun needs to go take a course in systems
analysis, as taught by that master thinker Russel Ackoff (Professor
Emeritus at the University of Pennsylvania and a founder of
Operations Research), and learn the importance at looking at the
WHOLE system before you try to identify and solve the problem.
First, it’s not at all clear why SCO
picked IBM to go after (other than its size).
So far, we haven’t seen any proof of who put the “copied
code” (if there is some) into Linux.
We suspect that means all the UNIX players, including Sun,
are at some risk. (In
fact, there are hints that SCO is about to go after another systems
vendor; we suppose Sun thinks that isn’t them.)
Also,
Sun is not just a UNIX player.
They are also a Linux player and there is a danger that Sun
will be viewed as a proxy for SCO. We suspect that Linux will be
increasingly important to Sun over time.
If that is the case, the problem to be addressed isn't how to
take short-term competitive advantage in the UNIX market, but rather
how to resolve whatever is at the root of SCO's unhappiness, so the
markets can proceed. That
would be a system solution.
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