Interview: SCO chief Darl McBride

The SCO Group has terminated IBM's right to sell its AIX operating system and is seeking $3bn in damages.

The company has also filed a permanent injunction that requires IBM to "cease and desist all use and distribution of AIX", and to return all copies of Unix source code to SCO.

SCO's lawsuit claims that IBM broke its contract with SCO by allowing parts of SCO's Unix V source code, licensed to IBM for use in AIX, to be used in the rival Linux operating system kernel.

vnunet.com spoke exclusively to SCO's chief executive, Darl McBride, about the court case, Linux and the future of SCO.

You've filed your injunction against IBM. When is the hearing due?
There's not a date set currently. The next action is really discovery, where we get a chance to go in and take a look at what has been going on at IBM.

It has said publicly that it moved, and is moving, key parts of AIX, and in fact is willing to move all of AIX over into Linux.

The problem with that statement and those actions is that SCO has a very strong contract in place with our software source code licensing agreement that has not allowed IBM to do that. So we are protecting those licence and contract rights.

We went to the 100 days of trying to resolve the issues. So in effect we pulled its contract and it doesn't have any authorisation to now use the software.

But in order to enforce that you have to go through the courts.
We have taken every step possible. Now it's for the courts to step up and enforce the contract rights that we have.

The people that have looked at this - both our legal teams as well as independent people coming from the outside - say: 'These contracts are bullet-proof. This is a very strong contract right you have.'

The way IBM is responding is very interesting. They haven't filed for an injunction; they haven't filed for the summary judgement enforcement to be dismissed.

When you have what people would call nuisance cases then you usually go in and try and knock those out with a summary judgement motion, or something to cause them to be dismissed. IBM has actually done none of that.

In fact, it took the opposite approach of not talking about it at all. So we're perfectly fine to go through whatever time it takes to get resolution on the legal path on this.

Now, as of 16 June, we also increased our claims amount to include all AIX-derived hardware, software and services, given that they are now - in deriving that revenue - on an unauthorised route for use of the software.

So what are you going to do in the meantime? Are you just going to wait?
Well, not necessarily. We have been pretty assertive and pretty aggressive and we are going to continue that.

So as we move into discovery this will be very nice for us, because now we get to go in and talk to all their people, their customers. We get to really shake things up and find out what really is going on over there.

Now, by going into pre-discovery, we have strong enough claims. We'd be fine to go to court just on what we have before discovery.

Is IBM agreeable to this process? Does it have to be?
In a legal setting it doesn't have a choice. In discovery you get to go in and investigate the things that relate to the case, and there are a broad range of things that relate to Linux and AIX. We will be going in with a fine-toothed comb and coming up with every detail.

Wouldn't you like to get this resolved quickly?
I would love to have this behind us and move on. IBM has put the brakes on to try and slow things down. And to the extent that it wants to do that, I am saying that we are prepared to go the distance on this. But I would prefer to get this resolved and move forward.

Have you got any idea when the main case will happen?
Well, we are going into discovery now, starting in July. I suspect that will take us into the fall timeframe. Then, I think, when all the discovery is on the table, you start talking about actual hearings. Can this take a year or two? I suppose it could.

Your permanent injunction is supposed to have happened by now.
We amended our original complaint to include the injunction. We are asking the courts to now enforce our contract rights to prevent IBM from shipping AIX software, so this ties right back into the main case again, which means we'll build the due discovery and then we'll go to the hearing.

How, in practice, could IBM return all copies of AIX?
I suppose the simple requirement is 'to return or destroy'. We haven't made that language up. That was in the contract that we picked up that AT&T and IBM had agreed to.

So I guess you simply take the copies of AIX that are out there and send them back to us, or you destroy them and give us notice of the date of destruction. It calls for that in the contract to certify that destruction has taken place.

Over the years, either SCO or its predecessors have put vendors on notice and those vendors stepped back in line very quickly, because everybody saw that going through this process and having your contract terminated was not a good thing.

So we really are in unprecedented waters. It will be interesting to see how it plays out.

Until the court case has been heard there is nothing you can do to enforce this, is there?
We have other rights under the contract that we are looking at. For example, we can audit IBM customers. SCO has audit rights on its customers. The reality is that we are going into discovery right now and that might be the vehicle to be able to investigate what we need there anyway.

There are other options we are looking at that we haven't gone down the road on yet. But for now it's playing the legal path.

Are you still saying categorically that there is offending code in the Linux kernel?
Yeah. That one is a no-brainer. When you look in the code base and you see line-by-line copy of our Unix System V code - not just the code itself, but comments to the code, titles that were in the comments and humour elements that were in the comments - you see that everything is taken straight across.

Everything is exactly the same except they have stripped off the copyright notices and pretended it was just Linux code. There could not be a more straightforward case on the Linux side.

And that's actually the Linux kernel, as opposed to other parts?
Correct, the kernel.

Have you given any thought to what these actions will do to your future business and your name as a company?
[When] people who have legitimate businesses and legitimate intellectual property that they want to protect see our code - and we've had a couple of dozen viewings now of the offending code - they just shake their heads and say: 'We can't believe [IBM is] doing this.' So we are already seeing the public opinion tide start to turn.

We're doing better business now than we have in the history of our company. From a pure business standpoint things haven't been better.

Did you know from your time at Novell that there was a legal case for SCO?
I'd been at SCO two months and [was] in the process of doing my research and really understanding what the company was about and what the opportunities were.

I talked to the top half-dozen executives inside the company and I talked to probably another dozen industry executives.

And in that process I heard from people inside and outside the company and from a top-level industry executive [about IBM's] Project Monterey.

When IBM walked away from Project Monterey it put a dagger into the heart of SCO. Santa Cruz Operation lost its heart at that point and sold its business to Caldera. Caldera tried to run it as a commercial business. That didn't work and it was nearly flat-lined when we took over last year.

What you see in this company right now is some resuscitation effort. We are coming back. The heart is beating very nicely. We're out of hospital and back in the marketplace. The company is totally revived around this concept that we were supposed to be the big dog.

You go back to SCO's brand in the 1990s and it was Unix on Intel. SCO was primed to seize the multibillion-dollar server market of Unix on Intel that hit in the early 2000s that has in fact shifted over to Red Hat.

We've been wronged and been wronged seriously, and part of the reason you don't see IBM fighting back right now is that those guys over there know what was going on.

Those guys know what is going to come out in discovery, and you hear a lot of rumours on the street that they are going to buy us out.

Well, I bet that's exactly what they want to do. The last thing they want to hear is the testimony that is going to come out.

Would you actually like to be bought?
No. Absolutely no. A few months ago that may have been an interesting notion, but from where we sit right now we are very strong. Our employees are strongly engaged on what we are doing. We are making record profits and see huge opportunities because of the licence rights we have around the Unix business.

Why do you think IBM hasn't pounced to buy you already?
I think it is trying to throw some shots at us. It threw Novell out in front of the bus a couple of weeks ago and Novell got run over.

It's a unique situation when a company as powerful as IBM has somebody coming at it with such strong claims as we have in a very public forum. So maybe its supercomputers haven't spat out an algorithm yet on how to respond to this kind of situation. I don't know.

Have you got any plans to sue any other company in the near future?
Right now we're focused on IBM. It's not that there's a shortage of companies in violation but, in terms of our resolve issues, we are not trying to announce a litigation path. For now, we are trying to get things resolved with IBM.

So there's nobody else lined up immediately?
Not currently.

Nobody at all?
No. We want to get a resolution to this. We are working very assertively with a number of industry leaders and we are trying to work through the issues. People absolutely, 100 per cent, now understand that there are problems.

Our belief is that we can get a fair amount of the resolution without having to resort to litigation from here on.

So what do you plan to do when the case is resolved?
Well, we have about 330 employees in the company and only about six are involved in SCOsource. We have two flavours of Unix ourselves that are doing well: UnixWare and Open Server.

Seven of the top 10 retailers in the world run on UnixWare or Open Server software. The Nasdaq stock market runs on UnixWare.

We have a new SCO-X web services platform that we announced a month or so ago. We have around two and a half million servers in the marketplace today, and with SCO-X we see a great opportunity to add web services components to our user base to give them additional value in running a server in a web-oriented world.

So we have a business that is running very nicely and we are pleased with the prospects. As we see money coming out of our SCOsource side we are going use that to fuel growth in the SCO-X business line.

Do you plan to sell Linux ever again?
We haven't made a comment on that yet. We expect to make some directional comments as we get into July. That's when we'll talk about how we will move forward with our potential licensing programmes as they relate to Linux.

At that point we will also make some directional statements about how we see ourselves in relation to Linux going forward.

Have you considered what would happen if you lost the case?
I haven't spent much time thinking about it because the claims we have are so strong. We're pretty clear about how this is going to play out.

But we think our claims are very strong. It is not a matter of reeling in compensation for this. It's a question of what form it takes - the form of settlement - if it goes all the way to litigation. Those are, to me, more the unknowns.

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