SCO Suit Losing Impact on the Enterprise?

UPDATE: The contract dispute that made national headlines and sent shockwaves through the Linux community is starting to have less of an impact on how companies are conducting business, according to industry analysts monitoring the case.

For nearly a year and a half, SCO and IBM have been knee-deep in a licensing dispute, which has evolved into a Linux-related legal tiff with Novell, Red Hat and some corporate Linux users.

In its defense, IBM filed a 100-page request with the courts this week asking for a “summary judgment” on SCO’s contract claims, for at least two independent reasons.

“Although SCO for months has claimed that it had evidence IBM took confidential source code from Unix System V and ‘dumped’ it into Linux, it has become clear that SCO has no such evidence,” IBM said in its filing. “Instead, SCO’s claims that IBM breached its agreements with AT&T depend entirely on the allegation that IBM improperly contributed certain of IBM’s original source code, contained in its own AIX and Dynix operating systems [each of which consists of millions of lines of source code], to Linux.”

Representatives of SCO naturally disagreed.

“We allege that IBM, through its contributions of AIX into Linux, is in breach of this software agreement,” SCO spokesperson Blake Stowell said. “According to IBM’s interpretation from their most recent filing, the 1985 Unix software agreement would provide less intellectual property protection than if no contract had been written at all. We look forward to proving our case in a court of law in the near future.”

IBM spokesman Michael Darcy declined additional comment, telling only that the filing “speaks for itself.” The two sides are expected to file additional arguments on August 23 in preparation for a September 15 court date where Judge Dale Kimball will hear arguments from both SCO and IBM regarding the latter’s request for partial summary judgment and SCO’s motion to dismiss IBM’s Linux-related copyright counterclaim.

“In essence, it is clear that SCO’s hopes of winning on the basis of Linux being a derivative work of Unix, and that it infringes on SCO copyrights, has so far been unproven,” Stacey Quandt, a senior business analyst at Robert Frances Group told “The core focus of the case goes back to what it was at the beginning — breach of contract — which SCO has not proven as well. IBM’s request for summary judgment highlights that the facts rather than legal technicalities are the key to unraveling SCO’s unproven claims.”

The back and forth argument is typical of what has been characterized by some as a “food fight” or a “playground squabble.” But while the legal aspects of the case roll on, Stephen O’Grady, a senior analyst with RedMonk, suggests the fighting is starting wear thin with vendors and customers.

“The impression that the case is without merit is supported by the fact that we have essentially stopped receiving questions about the case from vendors and enterprises with investments in Linux,” O’Grady told “This implies that these firms see little risk to their businesses from SCO’s claims. Further, it seems that SCO’s ongoing litigation efforts coupled with difficulties in actually selling its software have put it in a bad position to fight a protracted legal battle.”

Just the sheer numbers of continued Linux developments, partnerships and deployments is giving credence to the nullified SCO’s legal threat theory.

Market research firm IDC estimates the desktop Linux world will expand from 3.4 million clients worldwide in 2002 to more than 10 million by 2007. Enterprise deployments are even more robust. In May, IDC reported Linux servers posted more than $900 million in worldwide factory revenue, nearing the $1 billion mark. Compared with the first quarter of 2003, when the SCO case hit, Linux servers now show 56.9 percent growth, with unit shipments jumping 46.4 percent.

Rob Enderle, a market consultant and founder of the Enderle Group, also supports the burned out feelings about SCO in the enterprise. His clients include both SCO and Microsoft, both companies with a vested interest in slowing the growth of Linux adoption.

“Companies are going under the premise that whatever happens between SCO and IBM is beyond their control anyway,” Enderle told “They are tired of the drama of the case because it pulls the attention from their core business. The folks that are left are the few, loyal and dedicated small-time vendors that live and breathe UnixWare. Those guys are excited by what SCO is doing because the company is actually investing in the software. Novell kind of tossed them around for a while, and the previous version of SCO did the same.”

Enderle said more frightening to the enterprise was the independent study filed by insurance firm Open Source Risk Management (OSRM). The group recently revealed that the Linux kernel might have 283 non-court approved patents, including ones by leading Linux vendors like IBM, Cisco, HP, Intel, Novell, Oracle, Red Hat and Sony. The study also found 27 un-tested patents owned by Microsoft .

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