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SCO Spreads New Linux Copyright Notices

The SCO Group isn't letting the holidays slow down its copyright payment quest with users of Linux, as well as its pursuit of what it claims are copyright infringements with parts of the open source operating system.

The company has distributed a new round of notices to licensees of its Unix V operating system and has distributed other letters to Fortune 1000 companies requesting that they show they are not using the Lindon, Utah-based company's code in their Linux systems.

The letters to the Fortune 1000 companies, "outline additional evidence of copyright infringement in Linux," according to SCO, which promised last November that it would expand its pursuit of patent infringement cases beyond its legal tangle with IBM.

Two notices were sent out Monday. One seeks "written certification" from its licensed customers showing they are not improperly using intellectual property (IP) SCO owns on one version (System V) of the Unix source code; the other is a Digital Millennium Copyright Act (DCMA) violation notice sent to some Fortune 1000 companies charging they used Linux, allegedly with SCO source code.

SCO, in the middle of what figures to be a protracted and acrimonious legal battle with IBM over whether IBM broke a contract and allowed copyrighted Unix source code into the Linux system, has tried to woo, force or otherwise get companies using Linux to pay a licensing fee.

The company claims IBM violated its licensing agreement by allowing source code from System V Unix code that IBM licensed was released to the open source community and made its way into select versions of the Linux kernel. Thus, SCO claims that every Linux user should pay a licensing fee to SCO.

The latest move for the company is to certify that its own customers, the 6,000-odd companies paying license fees for their Unix networks, are complying with their license agreement. Each has until January 31 to fill out a questionnaire certifying they have not passed System V code to Linux maintainers or used the code improperly.

If the selected companies don't respond, SCO said it has the right to terminate its agreement with the company and discontinue the Unix license.

One reason for the notice could be to help its legal dispute with IBM. By collecting assurances from customers that they are not distributing its IP, SCO could be angling to show a court that IBM is the only or one of only several companies that allegedly distributed its IP. But SCO could also risk alienating its customer base with the request.

"We are taking action today to formally communicate to UNIX source code licensees and certain commercial Linux end users that they must utilize SCO's intellectual property within the bounds of their existing legal agreements and the Digital Millennium Copyright Act," said Chris Sontag, a SCO senior vice president and general manager, in a statement.

The DMCA violation letters, on the other hand, come with code samples showing exactly what parts of the Linux kernel code are SCO's IP, but muddy the waters. The code in question has nothing to do with its current brouhaha with IBM -- it comes from interface code used by the Berkeley Systems Development, Inc., and the University of California. Both settled with SCO in 1994.

A recent court ruling said SCO has to show IBM the code that is under dispute.

Whether the license-or-litigate program works for the company's bottom line remains to be seen. During its fiscal fourth quarter of 2003, SCO reported $10.3 million in license revenues, and overall, $24.3 million for the period that ended Oct. 31, 2003. The revenue was up 57 percent over revenue of $15.5 million for the same quarter last year.

Most of the jump, however, came from Microsoft and Sun , which both license Unix source code.

But SCO also said its net loss narrowed in its fiscal 2003 fourth quarter to $1.6 million (12 cents per share). During the same, year-ago quarter, SCO's loss was $2.7 million (26 cents per share).

SCO officials said they don't expect their licensing initiatives to have much affect on the bottom line in the first quarter of 2004; they expect to finalize licensing arrangements in coming months and see the revenue roll in around the second quarter.