SCO Expands its Lawyers’ Scope of Work

LAS VEGAS — SCO Group has upped the pay of the high-powered legal team heading up its patent lawsuit against IBM over the Linux operating system, as the company prepares for a new lawsuit against another Linux user.

The company sued IBM last March alleging that Big Blue made its proprietary version of the UNIX operating system, AIX, available to the open source community. IBM counter sued in August, filing in a Utah court claiming that SCO’s case breaches contract with IBM, infringes on its patents and signifies unfair competition, among other things.

Now, SCO says it plans on firing off another round of legal suits in the next 90 days aimed at a major user of the Linux operating system.

“We will be looking for a defendant who will illustrate the nature of the problem,” SCO’s attorney David Boies said during a conference call with reporters Tuesday.

Boies is best known for taking on Microsoft on behalf of the Justice
Department in its antitrust case, and for defending Napster against the RIAA. SCO Group retained him last summer.

The Lindon, Utah-based firm also said Tuesday that it is spending $1 million in cash and issuing 400,000 shares (currently worth just under $9 million) of stock and is expanding the scope of work of Boies and his firm, Boies, Schiller & Flexner LLP.

SCO said the $1 million cash for the attorneys’ fees were being taken out of the $50
million it recently received as a private placement of Series A Convertible Preferred Stock.

“During the past seven months, our company, along with Boies, Schiller &
Flexner, have uncovered a number of substantial software code issues as they
pertain to our UNIX intellectual property and Linux,” said SCO Group
president and CEO Darl McBride.

“By far the most important asset of this
company is our ownership of the UNIX operating system and today we are
investing in the protection and future of UNIX. Boies, Schiller & Flexner is
now moving beyond the contract issues we have with IBM. The firm will be
enforcing and defending SCO’s intellectual property rights, including the
protection of our UNIX System V source code and our copyrights that were
reaffirmed as a result of the BSDI settlement agreement.”

“We look forward to continuing our work with SCO to protect the Company’s
important and valuable intellectual property rights,” said Boies.

Also during the call, McBride called into question Novell’s recently announced plans to purchase German Linux distributor SUSE for $210 million. The executive said the acquisition violates a “non-competition agreement” that was included as part of SCO’s purchase of the UNIX source code. The company said it will wait for the Novell/SUSE transaction to finalize before its files any suits.

“Once the deal is done, the non-compete can be invoked at that point,” McBride said.

Ultimately, SCO’s claim is that it owns the copyrighted UNIX code and that it was
incorporated into Linux without authorization or appropriate copyright
notices. The code that has been identified includes UNIX System V code as
well as copyrighted code included in the 1994 settlement between Unix
Systems Laboratories, and Berkeley Software Design (BSD).

In theory, Linux is based on UNIX. SCO says it might be
possible to build a case that says some of its rights are being violated.
Linux is widely assumed to be open source software developed by volunteers
that can be freely downloaded.

“We will fundamentally fight this to the death,” McBride told
internetnews.com. “When you are going against a company that has more
attorneys than we have employees there is something to that. We’ve turned up
the heat because this is a timely issue.”

The company originally sued IBM
last March alleging that Big Blue spilled the beans and made its proprietary
version of the UNIX operating system, AIX, available to the open source
community. IBM counter sued in August, filing in a Utah court claiming that SCO’s case breaches
contract with IBM, infringes on its patents and signifies unfair
competition, among other things.

Since then, a number of sticky legal entanglements have ensued between
SCO and other vendors who employ Linux, including Red Hat and SGI. SCO
officials also have said
they would consider going after individual users whom they feel have misused
the company’s UNIX product, raising the ire of the Linux community as well.
Members of that community claim that these actions would directly contradict
the Gnu Public License (GPL), copyright law that essentially ensures the
continued freedom of open-source code.

In related news, Linus Torvalds’ current employer, Beaverton,
Oregon-based Open Source Development Labs (OSDL) issued a statement last
year saying that both received subpoenas on Wednesday from attorneys for SCO
requesting that OSDL and Torvalds produce documents for use in that dispute.

SCO Wednesday also subpoenaed five other parties who have had a hand in
the formation of Linux including OSDL CEO Stuart Cohen; Founder of GNU
Project and Free Software Foundation founder Richard Stallman; Digeo Corp.,
which employs Linux kernel maintainer Andrew Morton; Novell ; and John Horsley, vice president and general council at
Transmeta , Torvalds’ last employer.

SCO said the subpoenas help it gather information around IBM’s
interactions with these individuals.

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