SCO's estranged relationship with Linux

The SCO Group began its ill-judged and ultimately fateful legal action against IBM and the Linux community back in 2003, claiming that it owned the copyrights to Unix and UnixWare, and that Unix code had been 'stolen' and copied into the Linux kernel by IBM and others.

As everybody knows, the source code for the Linux kernel has always been there for all to see, yet SCO has repeatedly failed to come up with the 'stolen' goods. To rub salt in the wounds, Judge Dale Kimball has now declared that the copyrights to Unix belong to Novell, and that "SCO is obligated to recognise Novell's waiver of SCO's claims against IBM and Sequent", which judgement renders SCO's case against IBM effectively null and void.

The SCO Group was the offspring of a fitful marriage between the Santa Cruz Operation (SCO) and Caldera, a Linux company that performed a reverse takeover of two of SCO's divisions on 2 August 2000, three months before IBM announced its commitment to Linux.

Caldera's brand of Linux began as a skunkworks project within Novell. The project was led by Bryan Sparks and was codenamed 'Expose', and later 'Corsair'. When Ray Noorda, the founder of Novell, left the company, the skunkworks project was abandoned, presumably because Linux wasn't seen as an essential part of Novell's future business. Caldera was floated off during October 1994 to continue the Linux project, financed by Noorda and led by Sparks.

Sparks' role as chief executive of Caldera set a precedent. Each of SCO/Caldera's subsequent chief executives and many of SCO/Caldera's executives, had been ex-employees of Novell, including Darl McBride, the chief executive and prime instigator of SCO's 'Intellectual Property' siege on the computing industry.

In the Looking Glass

From the beginning, Caldera was not like other Linux distributions. The first official release included the proprietary 'Looking Glass' or Network Desktop, which meant that, unlike most other Linux distributions, Caldera's OpenLinux couldn't be legally downloaded or copied. Moreover, Caldera's adoption of the 'OpenLinux' moniker caused offence because it seemed to infer that Caldera's distribution was somehow more open than other versions of GNU/Linux, which it most definitely was not.

Such niggles confounded Caldera's relationship with the community from the beginning. Ransom Love, the immediate successor to Sparks, engaged in a famous spat with Richard Stallman, after Love had announced that Caldera would drop the GNU GPL (General Public License), the most common free software license, for future products because it was holding back its business. Love claimed: "We add value to Linux, so it can become successful. We integrate Linux in back office systems and we do all the marketing that's necessary. Did Richard Stallman ever invest $100 million (£50 million) in Linux? We did." Love asserted that the free software movement had "no clue" about marketing, and doesn't realise that "someone must pay for it", to which Stallman's curt response was that "Caldera's not a free software company at all. They are just a parasite."

Free software developers may have objected to the inclusion of proprietary software in Caldera's distribution but Love's defence was that "business doesn't care". He told Glyn Moody, a technology writer and author of the book Rebel Code: Linux and the Open Source Revolution: "We did get a lot of criticism, and people were concerned then that Caldera was trying to take Linux proprietary. And they couldn't be more wrong. Because we never had an intention. Never have. Never will."

According to Moody, Caldera always had an "unhappy knack of spotting the key trends ahead of everyone and never being able to capitalise on them" - examples being Caldera's negotiation of a port of Adabas to Linux (the first proprietary database software available for Linux), and a notoriously misjudged multi-million dollar agreement with Netscape, which was first announced on 15 December 1997.

Caldera made an "exclusive agreement to provide Netscape core server and client software to the Linux community", with rights to license Netscape software "to other Linux providers". Weeks later, Netscape released the client software for free, and gave the source code away to the developer community, severely undermining the 'exclusive' agreement with Caldera. Once again, Caldera had managed to be magnificently out of step with the community.

Loom and boom

Despite the vagaries of Caldera's history, a combination of the dotcom boom and the loom of Linux on the radar screens of Nasdaq investors (as a proven enterprise ready operating system) resulted in Caldera's successful IPO in January 2000. Caldera was valued at $1.1 billion (£550 million), which was considerably less than Red Hat and VALinux had achieved just months before. The dotcom balloon was about to burst, but Caldera had earned enough from its Linux operation to be able to dip into its coffers and purchase the Unix business of SCO a few months later an investment that was intended to open up SCO's extensive business channels to Caldera OpenLinux.

Instead, Caldera inherited a diminishing empire that had been losing business to both Linux and Windows, and a culture that subsequent events would suggest was hostile to both Linux and free software. The suit against IBM, the wording of SCO's complaint against IBM, and a series of increasingly hysterical press releases, suggested a lingering resentment and bitterness at SCO's capitulation to a mere Linux company.

Caldera was subsumed into the newly named SCO Group, and Caldera's OpenLinux and OpenServer were distributed under the aegis of SCO. The fact that Caldera had the finances to purchase SCO can be directly attributed to its Linux business. There is a case for saying that the SCO Group owed what fortune it had to the intellectual property of free software developers, and not the other way round.

As it transpired, SCO's management saw its greatest assets not in its disappearing distribution channels, but in its ownership of some of the rights to Unix and Unixware. These rights had been purchased from Novell, the company that had seeded the creation of Caldera a few short years before. Ray Noorda, the founder of Novell, had also provided the funding for Caldera, through his privately owned equity company, the Canopy Group, which owned 42.6 per cent of The SCO Group, as the company became known after the merger. The greater number of SCO/Caldera executives continued to be ex-employees of Novell, or appointees of The Canopy Group.

On the up escalator

Not all of this is surprising, because the SCO Group and Novell are the two major surviving software companies in Utah, the third being WordPerfect. In 1994, Novell bought WordPerfect for $1.4 billion (£700 million), which at the time was the largest acquisition in software history. Ray Noorda left the company shortly afterwards, and WordPerfect was sold on to Corel for just $20 million (£10 million) in cash and $100 million (£50 million) in stock a mere eighteen months later.

Certainly, each of Utah's major software companies, Novell, WordPerfect and Caldera, suffered adversity during the nineties, and the optimism that once surrounded Caldera and its Linux developers had long since disappeared by the time of its IPO, as its business had been overtaken by the other Linux distributions, which had taken more seriously their roots in the community.

Novell was the networking company of the eighties, exclusively providing the means to access PCs across local area networks, until Microsoft bundled its own competing technology into every copy of Windows, and trampled all over Novell's business.

Novell changed its business model more than once, but like WordPerfect, was no longer the force that it was in the halcyon days of the late eighties - until, that is, some months into SCO's action against IBM, when it up and bought Ximian and SuSE, and transformed itself into an up and coming Linux company, passing SCO on the up escalator as SCO slipped past on the down.

IBM's other women

The SCO Group's complaint against IBM was that Big Blue was using its know-how to make Linux "ready for enterprise use", and to supplant Unix with Linux in business. SCO's claim was that this was being done with "misappropriated" technologies. "Prior to IBM's involvement, Linux was the software equivalent of a bicycle. Unix was the software equivalent of a luxury car. To make Linux of necessary quality for use by enterprise customers, it must be re-designed so that Linux also becomes the software equivalent of a luxury car."

It should be noted that virtually every action of IBM that SCO has quoted took place after SCO, the "luxury car" company, had been bought out by Caldera, the bicycle company. Perhaps the most telling reaction was that of Linus Torvalds. In an email interview at the time with a US computer magazine, he distanced himself from the distracting hubbub, and observed: "Quite frankly, I found it mostly interesting in a Jerry Springer kind of way. White trash battling it out in public, throwing chairs at each other. SCO crying about IBM's other women... Fairly entertaining."

Unsurprisingly, Microsoft saw an opportunity to put the boot into IBM, a traditional enemy, and into Unix, which it has been claiming to supplant for well over a decade. It also took a swipe at Linux, which it has been unable to compete with in its traditional kick boxing style, despite the many jabs and insults that had been thrown in the Linux direction by the likes of Ballmer, Allchin and other Microsoft executives during the preceding years.

Weeks after the announcement of SCO's action against IBM, Microsoft declared that it had decided to purchase a Unix license from SCO a license it really didn't need, but which gave an apparent aura of credibility to SCO's claims. Microsoft wasn't alone. Sun, which has charted a zigzag course in its relationships with Linux and free software, also dipped its oar into the troubled waters, and purchased a Unix license from SCO. (Coincidently, Sun now owns Tarantella, the one division of SCO that had not been absorbed into the Caldera/SCO Group back in August, 2000).

Conveniently, these license fees added significantly to SCO's revenue, and helped with the legal costs that rapidly accrued. (This may have eased any bad feeling that remained between Microsoft and SCO/Caldera since the DR DOS suit had been settled against Microsoft and in favour of Caldera the IBM suit was not the first intellectual property case that Caldera had indulged in, nor the first that involved technologies that evolved elsewhere.)

One of the many ironies in this story is that SCO's version of Unix had been derived from Xenix, which had been developed by Microsoft, in partnership with the old SCO, during a brief flirtation with Unix back in the eighties. Some have said that Xenix was the best operating system that Microsoft ever produced.

The plot thickens

Almost immediately after SCO announced its case against IBM there was an unexpected and impassioned intervention from Novell's (then) chief executive, Jack Messman. Novell, having ditched the Caldera Linux operation in 1994, had suddenly became a Linux friendly company again. Messman, in the words of Novell's press release, "challenged SCO's assertion that it owns the copyrights and patents to Unix System V, pointing out that the asset purchase agreement entered into between Novell and SCO in 1995 did not transfer these rights to SCO", and demanded that SCO produce "facts to back up its assertion that certain UNIX System V code has been copied into Linux." Within months Novell was reborn as a Linux company, assisted in its purchase of SuSE to the tune of $50 million (£25 million) by IBM.

Subsequently, Novell has played a major part in the legal actions between SCO and IBM, in support of IBM's case, and as a key distributor of Linux, but the 2006 patent and licensing agreement between Novell and Microsoft, which followed Messman's replacement as chief executive of Novell has obscured much of this, and has further clouded the issues.

The judge has declared that the monies paid to the SCO Group for the purchase of Unix licenses by Microsoft and Sun are now owed to Novell. The SCO group is in deep trouble but, against all the odds, claims to be fighting on.

Sun meanwhile, may have a problem with OpenSolaris, as the intellectual property rights it purchased from SCO belong to Novell, which in the shape of Linux, is in direct competition with Sun. Both Microsoft and Sun Microsystems have given succour and financial support to SCO in the apparent hope of making mischief, discrediting Linux and slowing the inevitable progress of free and open source software. Sun paid SCO $10 million (£5 million) and Microsoft $16.75 million (£8.37 million).

The case never had much merit, and has been interesting mostly for SCO's persistence in coming back for more, as Pamela Jones of Groklaw put it, like the Black Knight in the Monty Python film, "It's only a flesh wound", or as Judge Brooke Wells put it, "SCO's arguments are akin to SCO telling IBM, 'Sorry, we are not going to tell you what you did wrong because you already know.'"

The Linux companies involved in this case, IBM, Novell and Red Hat, would be justified in ensuring the case ends with a complete exoneration of the Linux kernel developers who, quite rightly, have never given the case any more attention than it deserves. SCO's "luxury car" has been driven into a wall, and the episode may serve as a lesson that basing your business on intellectual property threats and litigation probably is not wise.

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