The SCO Group Inc. moved forward Tuesday with its plans to offer Linux users protection against a lawsuit by making available a license that gives them the rights to run the open-source operating system. The company is offering a SCO Intellectual Property License for Linux that permits the use of Linux without violating SCO Group's copyrighted Unix System V source code. SCO Group claims this code and derivative Unix code have been used without its permission to develop the Linux 2.4 and 2.5 kernels.

Each run-time-only license will cost a one-time fee of $699 for a single-CPU system until Oct. 15. After that, the price of the license will jump to $1,399.

"What's at stake here are intellectual-property rights," SCO Group president and CEO Darl McBride said at a press conference. Linux has to this point been used according to a "don't ask, don't tell" model, he said. "We're absolutely, 100% going to protect our intellectual-property rights, which we've spent hundreds of millions of dollars to buy and further develop," he said.

SCO Group hasn't defined pricing for systems using more than a single processor. If Linux users don't sign up for the new license, SCO Group has the ability to pursue individual users, McBride says, although he adds that the whole purpose of the licensing program is to avoid lawsuits.

SCO Group's contention is that it needs to collect fees from users for its intellectual property because vendors such as IBM and Red Hat Inc. don't indemnify their customers against intellectual-property infringements contained in the Linux kernel. "There's a shell game going on here about legal Linux liability," McBride said. "The rock is showing up under the shell of the end user. Vendors have shifted liability to their customers. IBM and Red Hat have painted a Linux liability target on the backs of their customers."

The SCO IP License for Linux announcement comes one day after Red Hat filed a formal complaint against SCO Group in U.S. District Court in Delaware. Red Hat is looking for a "declaratory judgment that Red Hat Linux does not infringe any copyright owned by SCO and does not utilize any trade secret owned by SCO." Red Hat is also seeking damages as well as injunctive relief, attorneys' fees, and costs for harm caused by "SCO's unfair competition and false advertising."

Red Hat on Monday also established a $1 million Open Source Now Fund, which will be used to cover the legal expenses associated with infringement claims brought against companies developing software under the General Public License and nonprofit organizations supporting the efforts of companies developing software under a GPL.

Red Hat's suit against SCO Group shows that the company is very serious about preserving its market, says Melise Blakeslee, a partner with law firm McDermott, Will, & Emery. "Red Hat is trying to reassure its customers that the accusations aren't true and that they're not going to sit idly by while IBM and SCO are tangled up in court."

Red Hat's suit also serves a practical purpose, Blakeslee says. Red Hat all along has said it's willing to examine SCO Group's evidence, while SCO Group has claimed it has offered Red Hat the opportunity to view the evidence under a nondisclosure agreement. This lawsuit will bring such bickering to an end by forcing SCO Group to "show their cards," she says.

McBride says his company is not at fault for any business Red Hat has lost since SCO Group in March filed its lawsuit against IBM and introduced the idea of Linux intellectual-property licenses. What's more telling is Red Hat's "faulty business model," he said. "Red Hat distributes under the GPL and has no power to prevent infringing code."

In response to Red Hat's suit, SCO Group says it can file a motion to dismiss or to file counterclaims against Red Hat. Either way, the company doesn't expect the suit will be settled before the start of its lawsuit against IBM, which is scheduled to begin April 11, 2005.

SCO Group claims it had pursued discussions for a global resolution to its intellectual-property problems, but the company won't say which companies were involved in those talks. Now that the process has broken down, McBride says, "It's time to march forward with our legal claims."