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9/26/2003
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HP's Big Bet

In offering to protect its users against potential Linux-related lawsuits, HP is daring SCO to show its hand

Since the question over Linux's pedigree first erupted earlier this year, companies that use Linux have managed to stay out of court. But SCO Group, which is pressing a $3 billion intellectual-property lawsuit against IBM, continues to hold out the possibility that Linux users could be held liable, too. The threat has caused some to throttle back deployment of the open-source operating system.

Hewlett-Packard last week moved to shield businesses from that concern by offering to indemnify its customers against potential SCO Group lawsuits. The decision is notable not only because HP becomes the first major Linux distributor to offer such protection, but also because it's doing so without having signed any new licensing agreements with SCO Group. HP, in essence, is challenging SCO Group to show its hand.

"I find it interesting that HP said that they have no Linux-specific agreements and have not paid SCO anything for that indemnification," Linux creator Linus Torvalds wrote last week in an E-mail to InformationWeek. "To me, it says HP isn't too worried about the validity of any SCO lawsuits." Torvalds co-manages development of Linux at the Open Source Development Lab, an industry consortium that includes Cisco Systems, Dell, IBM, and Intel.

At the root of the controversy is SCO Group's allegation that IBM programmers and other open-source developers illegally contributed Unix System V source code to the Linux kernel. IBM and Linux distributor Red Hat Inc. dispute the claim and maintain that indemnity protection isn't necessary for customers. Their tack: countersuits. IBM last week sued SCO Group in District Court in Salt Lake City, charging the smaller company with "misusing its purported rights" to Unix and patent infringement. Red Hat sued SCO Group in August for making "unsubstantiated and untrue" statements about open-source development.

Despite such moves, the threat of legal action from SCO Group hangs like a cloud over Linux adopters (see "Worried Yet?" June 23, p. 20). In a survey of 400 business-technology professionals completed earlier this month by InformationWeek Research, 28% of respondents cite "potential intellectual-property issues" as a concern in using Linux and open source.

HP's offer to protect companies that sign a Linux support contract was welcomed by some, including companies that don't get their Linux from HP. "It's a great thing. There's no downside," says Scott Hicar, CIO of disk-drive manufacturer Maxtor Corp., which uses Linux for a few applications. Hicar says he would like to see other Linux vendors follow suit.

Aberdeen Group analyst Bill Claybrook says such protection should be part of doing business. "If a company sells you software, they should stand behind it, even if it's not their software," Claybrook says.

Supermarket chain Giant Eagle Inc. is using Red Hat Linux on Compaq ProLiant servers. CIO and senior VP of information services Russ Ross says he's not concerned about SCO Group targeting his company, and he expects Red Hat to stand behind its product. "With any product purchase, I would expect whoever we bought it from to hold us harmless," Ross says.

SCO Group in May put businesses on notice when it sent letters to 1,500 companies, warning that using Linux could violate SCO's intellectual-property rights. It hasn't backed down from that warning. In fact, earlier this month, SCO Group president and CEO Darl McBride charged that more than 1 million lines of Unix code have been improperly moved into Linux. SCO Group is offering to let businesses off the hook if they sign one of its newly crafted Linux licenses. Until Oct. 15, the licenses cost $699 per CPU; after that, the cost doubles.

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