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OSCON 2004: The SCO Moot Court

by chromatic

Editor's note: This article came from detailed notes, though not a full transcription of the event. As a result, some of the names and dates may be incorrect. On 03 August 2004, Jonathan Zittrain clarified some of his comments further, as you can read below.

On Monday night of OSCON, several open-source-friendly lawyers held a mock court to debate SCO's recent Linux-related lawsuit with IBM. While the lawyers and audience itself were definitely most sympathetic to the opposite position, the idea that SCO has no copyright claims over the Linux kernel, as host Pam Samuelson pointed out, is a position that any good lawyer can reasonably argue.

Jon Zittrain, from Harvard Law School, who worked on Eldred v. Ashcroft, argued the pro-SCO side. Pam was careful to point out that Jon much preferred the IBM position, but since neither IBM nor SCO laywers could comment on the case without facing censure from the presiding magistrate, and she could not find anyone else willing to argue SCO's position, Jon took the job. Mark Radcliffe, an IP laywer from Palo Alto, California, argued the pro-IBM position.

The SCO Position

Jon started by explaining where SCO, at least the current iteration, came from. He traced it to Caldera, mentioning that the initial public offering in March 2000 produced a market value of $1.1 billion dollars. Today it's worth $61 million, thanks to the inappropriate, wrongful, and legally actionable IP theft from many parties, including IBM.

Jon next explained a brief history of Unix, starting at AT&T's Bell Labs in 1969. AT&T failed to make much of Unix until 1984, when the court-ordered breakup allowed them to pursue other markets it had left alone due to anti-trust concerns. Unix had a very collaborative and loose development, especially with universities. With the anti-trust concerns out of the way, AT&T tried commercial development.

Related Reading

Understanding Open Source and Free Software Licensing
By Andrew M. St. Laurent

You might remember that Richard M. Stallman started the GNU project also in 1984, intending to recreate a Unix-like system without using any Unix code.

AT&T owned almost every aspect of Unix and entered into some 80,000 licensing agreements with around 6,000 institutions. Jon claimed that, oddly, there were really no licensing templates -- these were very unique licenses. Thus, any licensing dispute with any group depends on the specific language of the license. He gave the impression that this was a mess, since decisions made on any one dispute would translate to other licenses only with difficulty.

Strange negotiations

Most importantly, IBM and AT&T made a deal where IBM could see and modify AT&T's SysV Unix code. IBM could redistribute any derived software it made but not the source code itself. IBM had to pay royalties and keep the source and aspects of operation of Unix confidential.

SCO's chain of title to Unix (at least as the company claims) is somewhat Byzantine, Jon said. In September 1995, Santa Cruz Operation (SCO Zero, not the current SCO One), bought almost all of AT&T's rights to Unix, apparently from Novell. Novell, retained 95 percent of the royalties from existing licences, but also retained veto power over licensing.

SCO maintains that Novell's power applies only to continuing licenses, not new ones. If this is true, Novell has no power over new licenses that SCO negotiated after this agreement.

Part of the confusion comes from the amendments that were eventually attached to the SCO-Novell agreement. Things started to fail with amendment one, which listed exceptions to the agreement. Purportedly, it left out all of the copyrights. According to Jon, SCO claims that this was a typographical error, corrected a year later in another amendment, itself confusing and mostly unreadable.

Interestingly, Darl McBride, now head of SCO, negotiated that contract--for Novell. He's prepared to testify on behalf of SCO now though.

SCO took no action until after the head of IBM software gave a keynote at LinuxWorld in January 2003, committing IBM's Unix and AIX expertise to improve Linux. This surprised SCO, who decided to play David to IBM's Goliath. (With a valuation of $143 billion, IBM is definitely larger than the $61 million SCO.) Jon explained that SCO merely wants to protect its rights as negotiated in IBM's agreement with AT&T.

What SCO contends

According to Jon, SCO contends that:

AIX is a SysV derivative
Linux is an AIX derivative
the code in question infringes unless someone removes it
the code lifted from Unix is literal code
the code is bound under confidentiality, so SCO cannot disclose it

SCO's ongoing discovery process is attempting to figure out exactly which code is infringing. SCO's interpretation of copyright law suggests that copyright protects not just literal code, but the sequence, structure, and operation of a program. So Linux doesn't have to copy Unix code line by line to infringe.

Even if they haven't shown specific code, Jon continued, SCO can still claim that there is infringement of certain ideas, methods, and concepts of SysV, with the reasoning that this is why IBM was so certain it could help improve Linux.

Even if copyright law doesn't cover this, IBM's contract with AT&T does. This contract prevents IBM from divulging this code.

Jon then provided musical and publishing examples of copyright precedents, citing the case where a jury decided that George Harrison subconsciously infringed on the song "He's So Fine" while writing "My Sweet Lord" and a case where a magazine published only a few words from Gerald Ford's upcoming autobiography but still infringed because it published the only words anyone would want to read from an otherwise turgid memoir.

SCO's argument, as Jon put it, is that "the infringing code is the heart and soul of Linux and Unix."

Lame justifications

The rest of SCO's position seems somewhat weaker.

For example, as proof that the case has merit, Jon suggested that SCO's lawyers believe in the case. Of course, they charge an hourly fee for the case much lower than the industry average--in exchange for 20 percent of the judgments, acquisitions, and financing that result from the case. In October 2003, when SCO raised $50 million, the laywers netted around $8.9 million. Clearly, they're willing to put their money where their mouths are.

As to the claim that Linux developers could rewrite the infringing code, SCO claims that this does nothing to satisfy the infringement. There are smaller penalties for unwitting infringement, but there are still penalties. Even though SCO failed to register its copyright (as the AT&T code came about before the U. S. signed the Berne Convention, giving authors automatic copyright protection without manually attaching a license to every copyrighted item distributed) before filing the suit, it still deserves statutory damages and can claim those in figure suits.

Jonathan Zittrain writes:

I think what I meant so say was: Thanks to the Berne Convention (and the Copyright Act of 1976), one no longer needs to formally register a copyright in order to enjoy protection. However, one must register before suing in order to have access to "statutory damages" -- damages in the absence of actual harm. SCO didn't register before suing IBM, so cannot claim statutory damages for copyright in its case. Of course, now that it's registered, any new cases could have such damages contemplated if all the other elements of infringement were proved.

Jon also mentioned some of the justification for the other suits and SCO's Linux licensing program. Most importantly, SCO believes that the open process of development used for the Linux kernel does not protect against improperly copied code. On the other hand, its amnesty program shows that SCO has a sense of mercy and compassion.

Of course, some commentators (as well as IBM) have pointed out that SCO has actually distributed Linux and related software under the GNU GPL. Jon explained that SCO's position that the GPL violates the U. S. Constitution. By the way, they didn't know then that they owned parts of the IP in Linux. They were angry to discover that.

The open source crossroads

Jon finished by describing the open source crossroads. It's a victim of its own success, with increasing mainstream acceptance by large corporate behemoths. Lawsuits are a fact of life in a pond this big. SCO's advice to developers is to get used to this.

There are many developers building groups, such as the Open Source Risk Management group, to offer protection from and education about copyright and ownership issues. Alternatively, users have the option of paying the $700 license fee. Otherwise, you can take your chances.

Jonathan Zittrain explains further:

The $700 license gets a promise from SCO not to sue for simply running Linux, but it requires the licensee to agree not to make any changes to the Linux source. So it's not much of an option for someone who actually wants to code!

Jon stepped slightly out of character (or put his tongue more firmly in his cheek) to explain that the nature of the failed dot-com company is to sue. If you've contributed to code without expecting remuneration, you'll have to wonder when they'll sue you too.

Of course, SCO hasn't yet sued anyone without a larger market capitalization than their own.

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