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Red Hat Goes on the Offensive Against SCO

SAN FRANCISCO -- Red Hat Monday says it has gone on the offensive and filed a formal complaint against SCO Group in a Delaware court.

SCO Group has caused a stir in the UNIX and Linux industries with claims that it has received U.S. copyright registrations for its UNIX System V and UnixWare source code. The Lindon, Utah-based company has even launched a $1 billion legal attack against IBM and has hinted it will soon put Linux distributors in its crosshairs.

The seven count complaint is broken up into two parts. The first two are designed to show that Red Hat's technologies do not infringe any intellectual property of SCO.

The other five invoke the Lanham Act and ask the courts for a permanent injunction holding SCO accountable for what CEO Matthew Szulik calls "unsubstantiated innuendo and rumor."

"For the past two months, we have listened to these unfounded claims," Szulik said. "We've been patient. We've listened. But when our customers and the whole open-source community are threatened with innuendo and rumor, it's time to act. Our goal is to find out the truth. Our suggestion to SCO is to 'prove it.'"

Szulik said his company was directly mentioned in a recent SCO conference call to investors that Red Hat says created an "atmosphere of fear, doubt and uncertainty about Linux."

"We filed this complaint to stop SCO from making unsubstantiated and untrue public statements attacking Red Hat Linux and the integrity of the Open Source software development process," Red Hat General Counsel Mark Webbink said in a statement. "Red Hat is confident that its current and future customers will continue to realize the significant value that our Red Hat Linux platform provides without interruption."

A source close to the filing told internetnews.com that the basis of Red Hat's argument hinges on evidence it has that SCO may have distributed some of its proprietary code under an open source license.

SCO executives claim Linux is essentially software piracy, and it is ready to open a new revenue stream by giving Linux users immunity to copyright violations through licensing.

"SCO has consistently stated that our UNIX System V source code and derivative UNIX code have been misappropriated into Linux," SCO spokesperson Blake Stowell told internetnews.com. "We have been showing a portion of this code since early June. SCO has not been trying to spread fear, uncertainty and doubt to end users. We have been educating end users on the risks of running an operating system that is an unauthorized derivative of UNIX. Linux includes source code that is a verbatim copy of UNIX and carries with it no warranty or indemnification. SCO's claims are true and we look forward to proving them in court."

SCO's crusade against Linux began with IBM. On March 6, the company sent a letter to IBM Chairman and CEO Sam Palmisano, warning him that IBM had allegedly breached its contract with SCO by contributing portions of its Unix-based AIX code to the open source movement, and by introducing concepts from Project Monterey, a joint effort by SCO and IBM to develop a 64-bit Unix-based operating system for Intel-based processing platforms, into Linux. IBM scrapped Project Monterey in May 2001.

As part of its offensive strategy Red Hat also said it has pledged $1 million to establish a new Open Source Now Fund. The goal is to cover legal expenses associated with infringement claims brought against companies developing software under the GPL license and non-profit organizations supporting the efforts of companies developing software under a GPL license.

Szulik said Red Hat would seek support from other commercial partners but did not guarantee indemnity nor did he detail the application criteria for non-profits.

Already, legal observers are debating whether SCO Group can support its legal claims.

Forrester analyst Stacey Quandt told internetnews.com the biggest question is how the legal posturing actually helps Red Hat.

"Red Hat wants to protect its install base and customer adoption of Red Hat Linux, but they are not the target of the initial SCO claim," she said. "Customers are being asked what is their tolerance for risk for deploying Linux. Based on what they are saying, Red Hat's action kind of muddles it in a way, but it doesn't look like it will change the original lawsuit."

The suits will be high topic of conversation at the LinuxWorld Conference & Expo in San Francisco here this week. Szulik is scheduled to deliver his keynote Tuesday.

In separate news, Red Hat said it has formed a global partnership with network storage firm Network Appliance .

The two companies say they are mutually committed to developing and delivering Linux storage protocols and collaborating on supporting customers.

Sunnyvale, Calif.-based Network Appliance said the companies also plan to engage in joint marketing efforts with a focus on database and layered applications areas, with an emphasis on data protection, technical applications, and storage consolidation. Formal Network Appliance/Red Hat certification and assertive co-marketing efforts for the joint solutions should debut in the third quarter of 2003.