SCO has finally named the first company it will sue for using Linux - the open-source operating system that SCO feels infringes its Unix copyrights.
Car parts chain AutoZone, headquartered in Memphis, is the lucky punter. And SCO has waited until today, when AutoZone is announcing its second-quarter results, to give it the bad news.
AutoZone sales are up 3.4 percent to $1.16bn although that is unlikely to be the main topic of conversation during a pre-arranged press conference later today. The company has yet to make an official statement.
It is also SCO's second-quarter earnings announcement day. It has a noticeably different set of results - down 18.9 percent year-on-year to $11.4 million.
Previously SCO has taken out lawsuits against IBM, Red Hat and Novell but, despite numerous assurances, had not attempted to sue a Linux customer. The suit against AutoZone, filed in Nevada, asks for injunctive relief and damages to be determined in a trial.
It sued IBM in March 2003, claiming that IBM illegally contributed SCO's intellectual property to the Linux source code. It has since claimed that Linux contains code copied directly from the AT&T Unix software SCO acquired in 2000 and has warned Linux users they could be sued unless they purchase $699-per-server software licenses from SCO.
SCO's critics say that the company has yet to prove its case, and that SCO's license, called the Intellectual Property License for Linux, amounts to little more than extortion.
In November, SCO claimed to be just 90 days away from launching a lawsuit against an end user but the deadline passed recently without a suit having been filed. The company was late in filing the suit because it had hoped to settle with customers before bringing litigation, said Blake Stowell, an SCO spokesman. "Our hope, as a company, was that litigation would be a last resort," he said. "In the end, I think we took a little bit more time to work things through with customers rather than go ahead with litigation."
Though SCO is engaged in lawsuits with Linux distributors Red Hat and Novell, it has not sued either company over the alleged copyright violations. When asked why his company had decided to sue end users rather than Linux distribution vendors, Stowell said: "If we did that, in some cases it could really hurt Linux, which is not necessarily something we want to do as a company. ... If you go and sue a Linux distributor, that could potentially hurt the Linux marketplace. Frankly, the GPL pushes all of that liability to the end user," Stowell added.
If Linux does illegally contain SCO's copyrighted code, the company could have a copyright infringement case against Linux users, because users inevitably copy software when they use computers, said Jeffrey Neuberger, a partner with Brown Raysman Millstein Felder & Steiner, who has been following the case. "If you buy something preinstalled on your hard drive, you're making a copy of that by installing your software into RAM," he said.
Should SCO prove its case, the company could seek statutory damages that range anywhere from $200 to $150,000 per infringement, Neuberger said.
Lawsuits against Linux customers could also further SCO's case against IBM, which was recently amended to include copyright infringement claims. "It's sort of a classic way of putting a pressure on a company like IBM," said Neuberger.
But the suit could also create liabilities for SCO, he said. "If their lawsuit isn't well founded, they could at a minimum be subject to sanctions," he said. "If IBM feels that the SCO claim isn't well founded, they could actually sue SCO for tortious interference"