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Novell Dares SCO to Sue SUSE Customers, Offers Indemnities

Novell Dares SCO to Sue SUSE Customers, Offers Indemnities

Novell completed its $210 million cash purchase of SUSE Linux on Monday, and immediately announced that it would indemnify "qualified" customers of SUSE Enterprise Server if the SCO Group sues them for copyright infringement as it's threatening to do any minute now.

Novell's indemnification chutzpah, shared only by HP, which says it helped Novell with its indemnification strategy, derives from its claim that it continues to own the Unix IP that was sold to SCO, a claim that must be of some comfort, legally speaking, to its buddy IBM, which SCO is suing for $3 billion.

In reaction, SCO put out a statement reiterating its own IP claims and saying that it was preparing to press its copyright claims against users.

SCO CEO Darl McBride was quoted as saying, "Indemnification programs or legal defense funds won't change the fact that SCO's intellectual property is being found in Linux. SCO is willing to enforce our copyright claims down to the end-user level and in the coming days and weeks, we will make this evident in our actions."

McBride also positioned Novell's indemnification announcement as being "significant for a couple of reasons. By announcing the program they are acknowledging the problems with Linux. Through the restrictions and the limitations on the program, they are showing their unwillingness to bet very much on their position."

Novell's cloak of indemnity is limited to SUSE Enterprise Server 8 users who after January 12, 2004, obtain upgrade protection and a qualifying technical support contract from Novell or a participating Novell or SUSE channel partner. Novell has put a cap of $1.5 million, or 125% of a customer's Linux contract with Novell, on the legal fees or awards it will reimburse. Users are on their own above that.

Novell claims that a technology license agreement between it and SCO gives it the right to authorize its customers to use Unix technology in their internal business operations and that the asset purchase agreement between Novell and SCO gives it the right "to take action on behalf of SCO," something it tried last year. It also claims to hold copyrights on the same IP that SCO does.

SCO, on the other hand, claims the asset purchase agreement gives Novell a Unix license to use Unix technology internally or in bundled or integrated products that it sells that do not compete with SCO's core Unix products. Linux, SCO said, clearly competes with Unix.

SCO also said that the now-famous Amendment 2 to the asset purchase agreement that it contends transferred the Unix copyrights and trademarks to SCO, a fact Novell appeared to acknowledge publicly in a press release last June, also says that "Novell may not prevent SCO from exercising its rights with respect to Unix System V source code."

Closing the SUSE acquisition triggers a $50 million investment in Novell by IBM, which in turn naturally demands that Novell show solidarity with its benefactor.

IBM is making the investment because it's gun-shy because of its experience with Microsoft and wants to ensure that two commercial Linux distributions exist and Novell, which needs revival itself, is ostensibly rescuing SUSE from its constant impeding financial doom.

Anyway, with the close, Novell also expects to wrap up negotiations between SUSE and IBM over IBM's continued support of the SUSE operating system on its servers and middleware as well as nail down some product and marketing support arrangements

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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