How To Fend Off SCO's Latest Threats
story.news.yahoo.com
Mon Nov 24, 4:36 PM ET
Erika Morphy, www.enterprise-linux-it.com
Although not at all unexpected, SCO's latest legal strategy -- taking the fight directly to Linux (news - web sites) users -- ratchets up the risk level for enterprises that have opted to use this technology. Last week, SCO announced that it would be filing a number of lawsuits against large enterprise (news - web sites)-Linux users for copyright infringement within 90 days.
Not that SCO is on solid legal ground. Indeed, more than a fair share of analysts and legal observers say that in the end, SCO's cause will be lost.
But, as Yankee Group analyst Laura DiDio told NewsFactor, "the case will ultimately be decided in court, and like any other court case, SCO's side will be heard and considered."
In the meanwhile, it is clear that enterprise users of this technology are at an increased exposure. At the very least, they can expect to spend more money on legal fees as they evaluate their position.
SCO's Shaky Finances
If it provides any measure of comfort, SCO also is feeling the pinch. (Good news for the many individuals who revile the company's practices. The hostility level is off the charts. In fact, SCO's CEO received death threats at Comdex (news - web sites) last week -- no doubt a dubious first in the annuals of the I.T. trade show.)
The SCO Group will pay its lawyers some US$9 million to pursue these lawsuits while also shelling out to defend itself against counterclaims by Red Hat (Nasdaq: RHAT - news) and IBM (NYSE: IBM - news), according to a research note by Gartner analyst George Weiss. This comes on top of a previously announced arrangement giving its legal representatives, the firm Boies, Schiller & Flexner, a 20 percent share in SCO if it is sold. Finally, SCO received some $50 million from BayStar Capital recently -- a welcome cash infusion -- but in return for 17.5 percent of outstanding shares.
"We believe these moves compromise SCO's mission as a software company," Weiss says in his note. "Increasingly, the legal and financial aspects of intellectual-property infringement cases will absorb the company's attention, and a law firm will be in an increasingly powerful position to set the overall agenda for its compensation."
Translation: You can count on SCO to make good on its threats to sue the users -- and quickly too. "It's degree of success will determine the vendor's financial health," Weiss said.
Recommendations for Linux Users <?b>
Therefore, Weiss is offering some Linux users some recommendations. Many boil down to common sense -- do not advertise your Linux deployment, prepare contingency plans -- but given the likelihood of lawsuits, they are worth reviewing:
Keep a low profile, and do not divulge details on your Linux deployments.
Unless a judgment in a case unequivocally mandates it, do not pay SCO the license fees it has asked to settle its allegations of infringement of IP rights.
Do not permit SCO to audit your premises without legal authorization.
Make sure your legal counsel is monitoring developments and, more importantly, understands the infringement claims and underlying issues.
Pressure high-profile Linux vendors to contractually guarantee against such claims by covering court costs. Evaluate HP's (NYSE: HPQ - news) willingness to indemnify Linux customers.
Fence off the innocuous Linux deployments -- such as network-edge solutions -- from the performance-intensive ones. "Where feasible, delay deployment of high-performance systems until the end of Q1 2004 to see what SCO will do."
Conversely, if such systems are already in production at your firm, develop plans that would allow for a quick changeover in case SCO is successful and requires the Linux kernel code to be substantially changed. "Unix (news - web sites) systems are the best alternatives," Weiss says.
Finally, for customers of SCO Open Server and UnixWare, an unfavorable judgment could cause SCO to cease operations or put itself out for sale. "That would harm future support and maintenance. Just in case, prepare a plan for migrating to another platform within two years," advises Weiss. |
