SCO Group's demands on fees may spark action

, posted: 17-Feb-2004 22:27

The SCO Group, locked in a bitter war against Linux and embroiled in a US$5 billion ($7 billion) lawsuit against IBM, may be heading into trouble with the regulatory authorities in New Zealand and Australia.

Asserting it holds the rights to the Unix operating system, SCO's Australia/New Zealand subsidiary is demanding licence fees of A$285 ($320) per desktop and A$999 per server from all Linux users. SCO says that Linux contains code copied from Unix, but to date its claims remain unproven.

Asked if SCO ANZ's demands for licence fees could be a breach of the Fair Trading Act, Commerce Commission's spokeswoman Jackie Maitland says its preliminary view is that "no one should pay an invoice unless they are clear on the obligation to pay". Furthermore, Maitland says that "it is not clear that SCO are entitled to charge end-users who have downloaded a product on the condition they understood the product was free".

A person or a company falsely claiming to have ownership of a product or service or the rights to payment could breach the Fair Trading Act, said Maitland.

The commission is at this stage not clear what if any representations have been made in NZ, but says it is aware that the ACCC in Australia and FTC in the US "are dealing with [SCO's licensing demands]".

Intellectual property lawyer Craig Horrocks says the commission's comment about representations made in New Zealand is hard to understand, because SCO's Intellectual Property Licence for NZ was widely reported in media here. Horrocks also asks whether New Zealand has adequate consumer protection in the technology arena if the commission simply defers to overseas agencies instead of taking action itself.

Before its crusade against Linux, Caldera, which later renamed itself The SCO Group, offered its own version of the free operating system called OpenLinux. It was well-received, especially as a desktop operating system alternative, and eventually ended up as the foundation of the United Linux consortium which featured large Linux distributions SuSE, Conectiva and TurboLinux.

Renamed "SCO Linux 4.0" and costing between US$600 and US$2200 the last version of SCO's Linux distribution was not a commercial hit, and is no longer for sale. However, Linux itself has always been covered by the GNU General Public Licence, which states any software offered under its terms is freely distributable, copyable and modifiable. This apparent paradox has not prevented SCO from claiming licence fees.

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