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Open season

Novell-SCO decision clears legal hurdle for upstart operating system Linux

Last Updated September 3, 2007

Tech Steve Ballmer, CEO of Microsoft Corp., right, speaks as Ron Hovsepian, CEO of Novell Inc., listens during a news conference in November 2006. The heads of the two software rivals reached an agreement to smooth compatibility of Windows and the increasingly popular open-source Linux system. (George Nikitin/Associated Press)

On the surface, a recent court ruling confirming that Novell Inc. has copyright ownership of the Unix operating system would appear to be nothing more than a case of contract law, of who owned what and when.

However, developers using open-source software with Linux are hailing the case as an important victory in a continuing battle in the software world over intellectual property rights, and one that could help shape the software industry for years to come.

That's because the company Novell won the decision against — the SCO Group — was engaged in a separate lawsuit against IBM. It argued IBM's use of a Linux-based operating system violated SCO's copyright of Unix, which SCO maintained that it had purchased from Novell in 1995.

But after Utah Federal Court Judge Dale A. Kimball's decision in August found Novell, and not SCO, owned Unix's intellectual property rights, the threat to Linux in the IBM case appears to have vanished, especially after Novell's top lawyer Joe LaSala confirmed what Linux distributors hoped — that Novell, itself a distributor of Linux, had no interest in claiming that Linux infringed on Unix.

"We thought SCO's claims were without merit. So no, Novell has no issues with Linux. We are not going to be pursuing any action," said LaSala, Novell's senior vice-president and general counsel, told CBC News.

"It's a good day for Linux users and distributors," he added. "A very large cloud has been lifted."

Most consumers have probably used Linux, even if they've never heard of the operating systems that often bear its name. The Linux kernel is the central component to the operating systems. It's most commonly found on computer servers, running everything from Google searches to corporate databases.

Tech American Nicholas Negroponte presents a prototype of the XO, the laptop of the One Laptop Per Child project. The laptop runs a Linux-based operating system. (Michel Euler/Associated Press)

Linux has also found its way onto some consumer platforms, including mobile devices and personal computers, and is increasingly becoming a low-cost alternative to other operating systems. The One Laptop Per Child project, for example, which aims to provide internet access to the world's poorest regions, runs a Linux-based operating system.

But compared with Microsoft's Windows, the various flavours of Linux still represent only a tiny portion of the consumer software world. And Windows still makes up the lion's share of the server market, with a 38.2 per cent share — worth $5 billion US in revenue — of the market, according to an August 2007 report from technology analyst IDC. Linux-run servers, on the other hand, represented 13.6 per cent of the overall server market, with business totalling $1.8 billion US for the second quarter of 2007.

Open-source vs. proprietary software

In proprietary source software, the underlying computer code is hidden, restricted and guarded by patent, copyright and other intellectual property protections. Unix — developed by AT&T's Bell Labs in the 1960s — and Microsoft's Windows operating system are examples of proprietary source software.

Open-source software, on the other hand, encourages people to use, read, add or modify the code without fear of legal repercussions, as long as they abide by conditions of a public licence.

The most widespread of these licences is the GNU General Public Licence, first developed in the 1980s by software pioneer Richard Stallman. It essentially requires those who agree to it to keep the software open and shareable, and thus grant the rights to use, read, add or modify to others.

The GNU/Linux operating system was born as an open-source project, the result of collaboration between Stallman's GNU project and programmer Linus Torvalds, who developed the Linux kernel in 1991. (GNU, in an odd bit of programming humour, is an acronym that is recursive — like a photograph of a person holding a photograph of themselves — and stands for "GNU's Not Unix.")

Because the source code is open, programmers from around the world began working with the new OS, adding their own features. Companies, including Sun Microsystems, Red Hat Inc. and Novell Inc., have released commercial versions of the program to compete with other operating systems.

But market share is not the only reason Linux has attracted attention: It and other so-called open-source software (see sidebar) have run into conflict with companies who run or license proprietary software, such as SCO, or more importantly, Microsoft, over whether the "open" software was truly original.

Allegations of patent violations

In an interview with the Chicago Sun-Times in 2001, Microsoft CEO Steve Ballmer called Linux "a cancer that attaches itself in an intellectual property sense to everything it touches." And in May of this year, Microsoft general counsel Brad Smith told Forbes that open-source software infringed on more than 235 of the software giant's patents.

Although Smith did not specifically name the patent violations, he did say Linux alone accounted for 107 of those violations.

But so far the main legal challenge has come from the company that later became SCO, which filed its lawsuit against IBM in 2003 and also asked companies that used Linux to pay licensing fees.

"When the suit was announced, there was a chill," said Jim Zemlin, the president of the Linux Foundation, in an interview with CBC News. "Any time something goes through a legal review it slows business."

This is where Novell, which runs its own version of Linux called OpenSUSE, stepped in, arguing its agreement to let SCO license Unix did not transfer copyright privileges.

The court agreed, and has since asked SCO and IBM to refile their cases given this new information before that suit can proceed.

Since the court agreed that Novell owned the copyright, Canadian intellectual property lawyer Philip Kerr told CBC News he thinks SCO's case with IBM has little to stand on.

"You can't have a copyright case where you don't own or have exclusionary rights to the copyrighted material," said Kerr.

SCO likely to appeal

Also unresolved is the issue of the approximately $25 million US SCO made from licensing agreements it signed with Microsoft and Sun Microsystems Inc., which runs a Unix-based operating system called Solaris. The licensing agreements were widely viewed within the Linux community as a way for the outside companies to bankroll SCO's lawsuit, though Microsoft and Sun have denied the claims.

Novell is arguing it is entitled to 95 per cent of the royalties from those licenses, since it was the owner of the copyright, said LaSala. The court is still considering what percentage must be paid to Novell.

On Aug. 28, however, SCO CEO Darl McBride told technology trade publication Information Week the company would likely appeal the federal court decision.

Linux foundation president Jim Zemlin said most Linux distributors had assumed the court would rule in favour of Novell, but even before the ruling, he said, most had stopped worrying about the threat of copyright infringement, in part because open-source code would have made any such copyright violations more apparent.

"Since anyone who wants to can get access to the code, there's so much transparency," he said. "For three years of brutal discovery they looked for similarities between Unix and Linux and couldn't. There's no violation."

Copyright vs. patent protection

While disputed copyright violations may be easier to spot, a murkier area of intellectual property law is patents, which are increasingly playing a larger role in software.

There were 40,964 software patents filed in the U.S. in 2006, according to an analysis of U.S. Patent and Trademark Office data published earlier this year by the Public Patent Foundation.

The foundation, an organization that tries to invalidate patents and lobby for patent reform, says software patents often cover trivial technologies and stunt innovation, an opinion LaSala and Zemlin agree with.

Kerr thinks patents are a more natural venue for software than copyright, though, because they protect not only the literal expression of an idea, but also the idea itself. But he said that doesn't necessarily mean innovation will be stifled.

"Just because two programs achieve the same result, they might not infringe on each other. If there are a number of different ways to do a task, each of those paths are patentable," he said.

Unlike copyright, which covers "original works" such as a novel, piece of music or software, patent law is concerned with protecting inventions. And while copyright is granted automatically to an author who produces an original work, patents must be approved through an application process before they are granted.

A U.S. decision handed down in May, KSR International Co. v. Teleflex Inc., could provide further clarity. In it the judges unanimously ruled that granting patent protection to "advances that would occur in the ordinary course without real innovation" retards progress and deprives real inventions of value.

So far the disputes between open-source and proprietary software distributors in patent law have demonstrated more bark than bite.

Microsoft's approach has been to sign patent protection deals with Linux distributors in which both parties agree not to pursue each other's customers for infringements, with the most prominent deal being with Novell.

But other Linux distributors, such as Red Hat, Mandriva and Canonical (which makes Ubuntu, a popular version of the operating system) have said they have no interest in such deals.

Zemlin thinks allegations about patent and copyright infringements with Linux will eventually be resolved, and thinks ultimately customers will choose the best operating system based on merit.

"I don't think the SCO ruling will make people switch to Linux," he said. "I think they'll switch because it's a high-quality operating system."

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