Risk Assessment

Under the U.S. Copyright Act, a court can award as much a $150, 000 in statutory damages per copyright infringement. A mere six such copyright infringements amounts to nearly $1-million. Just how many full, copyright-infringement statutory-damage awards can HP pay before it goes belly-up? HP did not answer that question!

However, legal expert Tom Carey notes:

It is hard to imagine under the current circumstances that HP will be liable for $150,000 per copyright violation. Such liability can only arise if SCO proves to the court that the copyright violations are willful. Given SCO's refusal to identify the code that is alleged to be infringing, proof of willful violation is all but impossible. Absent willful violation, the measure of statutory damages is "not less than $750 or more than $30,000 as the court considers just." Again, until SCO goes public with the exact code that it is talking about, what is just? Since SCO's own licensing program is under $1,000, that is the likely range of a "just" level of statutory damages.

Tom Carey is not particularly concerned with HP's failure to secure its indemnity promise:

The question of indemnification for off-the-shelf software is relatively novel. And even in industries where indemnification is common, providing collateral to secure the indemnity is the exception rather than the rule. So I am not alarmed by HP's position that they can shoulder the financial burden, and asking people to look at the HP balance sheet for proof. $13B in cash; $2B annual profit. That should be enough to cover any likely SCO claims.

Our sense of HP's risk assessment for its indemnification promise is that HP believes that SCO would not prevail in any copyright infringement lawsuits against HP Linux-product customers. Is that HP belief merely so much bravado and puff adder posturing? Or, is there something else afoot?

Unix License Piggybacking

There is a group of Unix licensees such as HP, IBM, Sequent, SGI, Sun and so forth that have modified the Unix System V code to come up with their own flavor of Unix -- which they then license to their customers. Let's call these licensees and their Unix licenses first-level.

The first-level Unix licenses seem to allow the first-level licensees such as HP, IBM, Sequent, SGI, Sun and so forth to develop derivate Unix works and then license Unix code and the derivative-works code to customers. What if HP's angle with its Linux-product indemnification products is that it is piggybacking its HP Linux products on top of its Unix license via the derived works concept or some other theory related to the application of its first-level Unix license?

If so, then should SCO attempt to sue a HP Linux-product customer for copyright infringement all HP has to do is merely interpose its Unix license in defense and SCO is out of court. If HP has figured out how to piggyback its Linux-product sales on top of its Unix license, then there is very little financial risk to HP when it comes to indemnifying its Linux-product customers against SCO copyright claims.

We discussed this Unix license piggybacking notion and other HP indemnification issues with HP's Elizabeth Phillips, SCO's Blake Stowell, and legal analyst Tom Carey. Elizabeth Phillips sidestepped the Unix license piggybacking issues. Blake Stowell denied the availability of any such Unix license piggybacking. On the other hand Tom Carey considers Unix license piggybacking a possibility. So do we.

If Unix license piggybacking is a viable trick, there is an interesting domino effect that works against SCO's claims that GNU-Linux users must obtain a SCO IP License for Linux. If HP can do Unix license piggybacking, it's likely that most other first-level Unix licensees such as IBM, SUN, SGI, and so forth also can do Unix license piggybacking.

Moreover, HP's Elizabeth Phillips told MozillaQuest Magazine that: The indemnification offer applies to Mandrake, Red Hat, SuSE, UnitedLinux, Connectiva, Caldera, Red Flag. Couple that with the Unix-license piggybacking trick. That suggests that it could be that most other first-level Unix licensees such as IBM, SUN, SGI, and so forth also can do Unix-license piggybacking -- and do it with most any GNU-Linux distribution.

Substantive Risk -- Is SCO Correct?

Unix-license piggybacking could be a factor in HP's assessment of the risks involved in indemnifying its Linux-product customers against potential copyright infringement enforcement problems from SCO. The chances of SCO winning any lawsuits involving alleged infringement of SCO's Unix copyrights is very likely another factor in HP's assessment of the risks involved in its Linux indemnification program. And so far SCO has not presented a very convincing case that GNU-Linux users violate any SCO Unix copyrights.

Early on in the SCO IP circus, Linux kernel gurus told MozillaQuest Magazine that the Linux kernel does not infringe upon any SCO-owned Unix code. Nor has SCO publicly shown any significant SCO-owned code in the Linux kernel.

In our 18 March 2003 article, Alan Cox, Richard Gooch, and David Weinehall Respond to SCO's Linux-Related Claims, we noted that so far SCO had not publicly identified any SCO-owned code residing anyplace in Linux and challenged SCO-Caldera CEO, Darl McBride, to show publicly any such code. Then, In our article SCO Clears Linux Kernel but Implicates Red Hat and SuSE SCO admitted that it had not found any SCO-owned Unix code in the Linux kernel or the GNU-Linux operating system. Additionally, Conectiva, Mandrake, and SuSE spokespeople told MozillaQuest Magazine there is no SCO in their code. That's in our article Is SCO Trying to Renege on Clearing Linux Kernel ?

Meanwhile, highly respected analyst Bill Claybrook took a look at the code that SCO claims shows Linux infringes on SCO's Unix code. In our article, Only 80 Lines of Common Unix and Linux Code -- SCO-Caldera Shows No Proof That Linux Was Derived from Unix, Bill Claybrook told MozillaQuest Magazine that SCO-Caldera did not show him any probative evidence that Linux was derived from Unix -- or any probative evidence that there is any SCO-owned Unix code in either the kernel.org Linux kernel or the GNU-Linux operating system (OS).

The German courts have enjoined SCO from making any claims there is SCO code in the GNU-Linux OS. Moreover the German Courts found SCO in contempt for disobeying German Court Orders about that.

Additionally, SCO has admitted that is does not own the copyrights to the key JFS (Journaling File System), RCU (Read, Copy, and Update), NUMA (Non-uniform Memory Access) software, and other IBM-developed AIX code that IBM contributed to the Linux kernel.

Please check our special SCO IP Articles Index for many more stories that look into and analyze SCO's copyright and anti-Linux claims.

It could be that HP's entire, or nearly entire, risk analysis is based on HP's belief that SCO cannot prevail in a lawsuit based upon claims by SCO there is SCO-copyrighted code in the GNU-Linux operating system.

SCO-Caldera & the GNU/Linux Community: The SCOsource IP Matter

SCO-Caldera & the GNU/Linux Community: Part 2, Under the Iceberg's Tip

• Are SCO's Rebuilt IBM Lawsuit and Unix License Revocation Winners -- Or More SCO FUD?

Part I: Overview and Prologue

Part II: Tom Carey and Mike Angelo Discuss SCO's Amended IBM Lawsuit Complaint and Unix License Revocation

SCO-Caldera & the GNU/Linux Community: The SCOsource IP Matter

SCO-Caldera & the GNU/Linux Community: Part 2, Under the Iceberg's Tip

About the "Hey SCO, sue me" Petition

Caldera OpenLinux 3.1.1 Available

Caldera OpenLinux Workstation 3.1 -- A First Look

UnitedLinux, a Divisive Weapon for Caldera's Darl McBride -- Part I

UnitedLinux, a Divisive Weapon for Caldera's Darl McBride -- Part II

SCO's Darl McBride and MozillaQuest Magazine's Mike Angelo Discuss Caldera Linux and LSB

Young People Are The Future of Linux - Gaël Duval, Joe Eckert, Randy Plessor, Jeremy White, and Mike Angelo Discuss Linux and Open-Source Software in Schools and Colleges

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