August 5, 2003 12:13 PM PDT

SCO sets Linux licensing prices

Software maker SCO Group fired back at Linux leader Red Hat on Tuesday and revealed steep licensing prices for Linux users who want to steer clear of the company's legal wrangle with the open-source operating system.

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In a teleconference with media and financial analysts, SCO CEO Darl McBride bluntly accused Red Hat of distributing Linux software that illegally copies SCO's Unix code.

"Red Hat's lawsuit confirms what we've been saying all along--Linux developers are either unable or unwilling to screen the code" that goes into the Linux kernel, McBride said. "Red Hat is selling Linux that contains verbatim and obfuscated code from Unix System 5."

Red Hat declined to comment, citing pending litigation.

The conflicting claims stem from SCO's filing of a $3 billion lawsuit against IBM, claiming that the computing giant illegally incorporated into its Linux software source code from the Unix operating system that SCO controls. SCO further riled the Linux community by sending letters to 1,500 IT managers warning them that any use of Linux could expose them to further intellectual property claims.

Red Hat, one of the largest distributors of Linux and related applications, filed the suit Monday in the U.S. District Court in Delaware. The suit in part seeks a court ruling affirming that the company has not violated SCO's trade secrets or intellectual property rights. It claims that SCO's actions are intended to hurt Red Hat and other Linux backers by creating "an atmosphere of fear, uncertainty and doubt about Linux," according to the suit.

As promised, SCO unveiled a licensing plan Tuesday for businesses that want to continue using Linux with SCO's blessing. The new license gives customers the right to use any SCO-controlled Unix code allegedly incorporated in Linux, starting with the 2.4 version of the Linux kernel.

Prices are steep, for a free operating system. Introductory prices include $199 to run Linux on a desktop PC and $699 to run it on a server with a single CPU. The server price jumps to $1,399 after the introductory period ends on Oct. 15. By comparison, Red Hat's standard version of desktop Linux sells for $39.

McBride said businesses that continue using Linux without a SCO license can expect legal action. "We're absolutely, 100 percent going to fight for our intellectual property rights," he said. "If we don't get there with licensing, we will have to move to enforcement actions."


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Gordon Haff, an analyst for research firm Illuminata, said he expected few businesses to pay SCO for Linux licenses unless lawsuits begin to target Linux users.

"I think SCO will try to get some licensing fees, but until they do something to indicate they're going to take people to court, it's not going to happen," he said.

If SCO is successful with its intellectual property claims, however, such licensing prices will help kill Linux, Haff said.

"If you take away the price advantage and essentially eliminate the open-source development model, what do you have left?" he asked. "There's nothing magical about Linux from a technical perspective...And you're probably cheaper behind Windows or using Solaris," Sun Microsystems' version of Unix.

Along with the lawsuit, Red Hat announced it had set up a defense fund, with an initial pledge of $1 million, to help pay legal fees for any open-source software developers or nonprofit organizations targeted by SCO.

McBride said it was telling that the legal fund offers no protection for customers.

"The reality here (is that) IBM and Red Hat have painted a Linux liability target on the backs of their customers," he said. "Due to IBM's and Red Hat's actions, we have no choice but to fight the battle at the end-user level."

McBride also was unusually blunt in attacking open-source software, saying the general public license (GPL) format that Red Hat and other Linux sellers rely on is fundamentally flawed from a business and legal perspective.

"At issue here is more than just SCO and Red Hat," McBride said. "What is at issue here is whether intellectual property rights will have any value in the age of the Internet."

 

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