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SCO: Computer Associates And Two Other Companies Signed Linux Licenses

CA, Questar, a Salt Lake City energy company; and Leggett & Platt, a manufacturing company, signed licenses which SCO says will protect them from potential litigation related to their use of Linux.
The SCO Group confirmed that Computer Associates International and two other corporate Linux users signed SCOsource licenses, but they did so before SCO's first round of litigation against Linux end users earlier this week.

On Thursday, SCO said Computer Associates, an Islandia, N.Y.-based software vendor; Questar, a Salt Lake City-based energy company; and Leggett & Platt, a Carthage, Mo.-based manufacturing company; have signed licenses, which will protect them from potential litigation related to their use of Linux.

SCO has signed a total of six licensees since launching its major Linux lawsuit against IBM last March and its SCOsource licensing program for Linux users in August. Microsoft and Sun Microsystems, which are competing with Linux in the operating systems space, publicly announced licensing deals with SCO earlier this year. On Tuesday, SCO identified the other licensee as EV1Server.NET.

CA, Questar and Leggett & Platt were named as licensees in a Feb. 4 letter written by SCO attorneys to IBM as required by a Utah court. The three licensees were signed well before SCO expanded its Linux litigation beyond vendors and sued end users AutoZone and DaimlerChrysler.

Computer Associates, a major corporate backer and user of Linux, signed a SCOsource license last August as part of a $40 million settlement between CA, the Canopy Group and Center 7. The Canopy Group is The SCO Group's largest investor, with a stake of almost 40 percent.

"Computer Associates disagrees with SCO's tactics, which are intended to intimidate and threaten customers," said Sam Greenblatt, senior vice president and chief architect of the Linux technology group at CA.

At a recent panel discussion on open source, Greenblatt said that almost 35 percent of CA's internal business runs on Linux. "CA's license for Linux technology is part of a larger settlement with the Canopy Group. It has nothing to do with SCO's strategy of intimidation," he said.

Chad Jones, a spokesman from Questar, confirmed that the $3.1 billion company signed a license with SCO for its Linux servers. The energy company also runs a separate IT consulting subsidiary, Questar InfoComm, that provides IT support for Questar and several other Utah-based companies, Jones said.

Questar signed its intellectual property license with SCO within the last six weeks for roughly $5,000, according to Jones. Questar has seven servers out of 100 running Linux, and the rest are running Novell NetWare and Microsoft Windows, he said.

Questar has no relationship with SCO executives, and Questar's decision to sign a license doesn't indicate that it supports SCO's licensing maneuvers, Jones said. "This is a business decision for us. It was strategically prudent for us to pay them this small amount. We're not trying to legitimize their claims," he said.

Chris Maresca, senior partner at Olliance Group, a Linux consultancy in Palo Alto, Calif., said the fact that only six companies have signed licenses shows that most Linux customers aren't receptive to legal threats because SCO hasn't yet proven its Linux claims in court. He predicted that SCO's lawsuits against auto-parts retailer AutoZone and car manufacturer DaimlerChrysler won't increase licensing revenues significantly. The case against IBM isn't expected to begin until April 2005.

"I can't recall anyone being concerned about a SCO lawsuit," Maresca said. "Most large companies are cautious about [intellectual property] in general, and the SCO [situation] does not change that in any significant way."

However, attorneys in the intellectual property realm expressed mixed views about the SCO cases' likely impact on lawsuit-averse CIOs.

Thomas Carey, an intellectual property attorney and partner at Bromberg & Sunstein, Boston, said that while signing SCO licenses negates one key benefit of moving to open source--no-cost licensing--the uncertainty of litigation may push some CIOs to sign licenses anyway.

"This is likely to make large corporate Linux users consider more carefully the possible attraction of signing a licensing agreement with SCO," Carey said. "If financial officers take a hard look at it, they might decide that taking a license from SCO is cheaper than fending off a lawsuit."

However, Philip Albert, a partner at Townsend and Townsend and Crew, San Francisco, said SCO's lawsuits against end users will backfire. "If SCO starts asserting contractual claims based on licenses, no one is going to want to take a license," Albert said.

Several vendors--including Hewlett-Packard, Novell and Sun--offer indemnification policies for customers that face litigation from SCO, but the terms of those policies vary. IBM has contributed to an Open Source Development Labs Fund but offers no separate indemnification policy. Red Hat offers IP Warranty, a promise that it will rewrite any code that puts a customer in legal jeopardy.

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