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Technology Stocks : SCO Group (SCOX)

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To: Glenn Petersen who wrote (73)8/5/2003 11:32:30 AM
From: Dr. Voodoo  Read Replies (1) of 239
 
Payback is gonna be a .........

forbes.com

Red Hat's Mad Matt Vs. Humongous SCO Lawsuit
Daniel Lyons, 08.04.03, 6:00 PM ET

NEW YORK - It's a bit like the scene in Mad Max 2--The Road Warrior, where Mel Gibson and his clan of post-apocalyptic misfits finally get tired of being attacked and decide to turn the tables on The Humongous and his marauding leather-clad baddies.


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Matthew Szulik, chief executive of Linux distributor Red Hat (nasdaq: RHAT - news - people ), says he's sick of the veiled threats that SCO Group (nasdaq: SCOX - news - people ) has been making toward his clan of Linux brethren. So rather than wait for SCO to start suing Linux customers, Red Hat has launched a preemptive strike and sued SCO, charging the Lindon, Utah-based company with unfair and deceptive business practices.

"This is a march for freedom," Szulik says. "This is about a minority who are trying to hold the open source development community hostage. We had to step forward and say, enough is enough."

The whole sorry saga began last March, when SCO sued IBM (nyse: IBM - news - people ), claiming that Big Blue had ripped off SCO's Unix code and put it into Linux.

Linux geeks howled a bit, but then wrote off SCO as a bunch of sleazebags and went back to playing live-action roleplaying (LARP) games in their mothers' basements, or whatever it is they do when they're not writing device drivers and complaining about clueless end users.

But then SCO started making noise about suing Linux customers too, unless they paid licensing fees to SCO. Suddenly the joke wasn't so funny anymore.

SCO has not actually sued any customers. Nor has it sued Red Hat. But SCO says it believes that certain versions of Linux contain stolen code. Szulik says that in a recent conference call, SCO executives specifically mentioned Red Hat--and that's what put him over the edge. "Our customers are being threatened by this vague innuendo and unsubstantiated rumors," Szulik says.

So now he has gone to court asking a judge to declare that his product does not infringe on SCO's intellectual property. It's a bit like asking a judge to declare that you didn't rob a bank, even before the police have charged you with a crime.

"They've gone to our customers and business partners numerous times and have said publicly that Linux is infringing. We want the truth. We want them to stop engaging in unfair business practices. Basically what we're saying is put up or shut up," Szulik says.

Szulik figures his lawsuit, filed in Delaware, can move along more speedily than the SCO suit against IBM, which is slated for trial sometime in 2005. Rather than live under the shadow of SCO's allegations for two more years, he figures he can drag SCO into court now and make them prove their allegations.

Another potential benefit is that by stepping up to the plate, Szulik can raise his company's profile among distributors of Linux.

In addition to the lawsuit, Red Hat says it has set up a sort of legal defense fund to protect little companies that help develop Linux code. Red Hat kicked in the first $1 million and hopes others will contribute to the Open Source Now Fund.

SCO said its executives were not available for interviews. The company put out a statement reasserting its claim that Linux contains code stolen from Unix. "SCO’s claims are true and we look forward to proving them in court," the statement said.

What about customers? William Homa, chief information officer at Hannaford Bros., a subsidiary of Delhaize Group (nyse: DEG - news - people ), which operates 119 supermarkets in the Northeast, says he'll keep rolling out Linux across his organization. "This is a bonanza for lawyers and reporters. For the rest of us it's a non-issue."
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