Last March, SCO, a Utah-based software company sued IBM over what amounted to breach of contract – code from a joint-project between the two companies was “found” in the Open Source project GNU/Linux without the permission of SCO. Since then, SCO has opened lawsuits against individuals, companies and organizations that have contributed to the popular GNU/Linux project, claiming that source code on which SCO had copyrights was misappropriated and distributed freely without a license from SCO.
Two weeks ago, Darl McBride (CEO for SCO), wrote an open letter to Congress asking for intervention and claiming in short that the GNU/Linux and other Open Source projects were a threat to National Security, a threat to the livelihood of “our capitalistic system” and a threat to other companies like SCO.
Net-based communities such as Slashdot and Groklaw have been following this story since day one and recently linked to the aforementioned open letter. The content from the first five pages of the document is what I’ll be focusing on here (the other four pages constitute an earlier attempt by Mr. McBride to garner the attention of the politicos in D.C.).Stating,
First, Linux and Open Source software are developed and distributed (often at no cost) under a scheme called the GNU General Public License (GPL) which, some believe, is in direct contradiction to U.S. Copyright law, to the Digital Millennium Copyright Act (DMCA), and to the recent Supreme Court decision in Eldred v. Ashcroft. I have attached a document that describes in detail the problems of the GPL and the ways in which it violates current U.S. statutes.
Feel free to call me a poor indebted college student, but the “no cost” paradigm certainly seems to be as finger friendly as ramen por gratis. The GPL is in no way affected by the Eldred case, the DMCA or current U.S. Copyright law — in fact, the GPL is itself a form of copyright albeit, seemingly more flexible and developer pleasing. I should note, that the discussion over the GPL deserves more space and time than I can give it, however as of right now the GPL is essentially license whose enforcement has been done through public channels, confronting companies and individuals suspected of violating it (e.g., Linksys and Corel). In short, it almost operates as on an academic honor code of sorts — allowing individuals and companies to modify an existing code base so as long as they publish the changes and respect the copyright notices of those that have contributed to the code previously.
In a nutshell: just because the State is unable to enforce it or chooses not to does not neccesarily make the GPL invalid (I should also point out that I’m not necessarily a proponent of the GPL or think that it holds any water, but simply that his argument is fallacious on this point).
Those who designed the GPL readily admit that they created this license to have the effect of “freeing” software – taking it out of the realm of copyright protection by placing it in the public domain. The author of the GPL is well-known for his view that proprietary software (meaning software as an intellectual asset from which the designer can derive profit) in unacceptable.
Richard Stallman is the principal author of the GPL and founder of the GNU Open Source movement (started 20 years ago). Attacking Mr. Stallman’s personal views regarding proprietary software amounts to little more than an ad hominem and aside from appealing to the emotions, has little bearing on the GPL, GNU/Linux or Copyright law itself.
The GPL seeks to commoditize software by reducing its monetary value to zero and making it freely available to anyone. The GPL is carefully designed to have a viral effect – it “frees” the software that is proprietary, licensable, and a source of income from the companies that developed it. Until now it has generally agreed that the GPL has never faced a legal test. SCO is involved in a major software intellectual property case through which the GPL will face such a test.
Mr. McBride talks as if it is a foregone conclusion that commoditization of the software industry would be a bad thing… wholly glossing over the fact that the commoditization of the PC hardware industry led to an increased overall market and large profits for the company which should’ve, by his logic, been the loser, namely IBM. Additionally, thousands of programs are released every year under various “free” schemes outside of the GPL schema including: shareware, freeware and full-featured demos. Also, competition in free-markets push companies to charge less for more features — Free Software is simply at one end of the spectrum.
A personal real world example: as a college student I can “legally” purchase various packages from Microsoft at rates hundreds of dollars cheaper than what you can find in retail outlets or online. Additionally, companies like Microsoft bundle dozens of free applications in their products (e.g., Outlook Express and Internet Explorer). I use this latter example because SCO recently sold Microsoft a license to their UNIX code-base.
On Mr. McBride’s second point, just because an individual, company or organization develops software (or anything for that matter) does not mean they have to charge for it or license the product in some proprietary manner — that is a non sequitur. In fact, the TCP/IP stack found in proprietary software such as Windows NT is based on freely distributed code from the FreeBSD project, another Open Source Free Software project.
The second problem with the Open Source software is that it is not all original. Linux software contains significant UNIX software code that has been inappropriately, and without authorization placed in Linux. I know this because my company, The SCO Group, owns the rights to that UNIX code originally developed by AT&T. SCO holds licenses to this valuable asset with more than 6,000 companies, universities, government agencies and other organizations. But as the use of Linux has grown, license revenue from UNIX has shrunk. Why wouldn’t it? Why would someone license UNIX code from SCO and other legitimate providers when they can get much of that same code, for free, in Linux? The damage this has inflicted on SCO’s UNIX business is an example of what could happen to the entire software industry if the current Open Source model continues. For this reason, SCO has taken legal action against those who, we believe, have misappropriated our most important corporate asset. By taking action, our company has become a taget for sometimes vicious attacks – including online attacks that have repeatedly shut down our company Web site. Despite this, we are determined to see these legal cases through to the end because we are firm in our belief that the unchecked spread of Open Source software, under the GPL, is a much more serious threat to our capitalist system than U.S. corporations realize.
In 1991, Linus Torvalds, then a college student in Finland, sent an email off to Professor Andrew Tanenbaum regarding a project Mr. Tanenbaum managed called Minix. After receiving a less-than enthusiastic response, Mr. Torvalds then started from scratch the kernel project which is commonly referred to as Linux. Over the past 13 years, thousands of software engineers, enthusiasts and students have contributed source code to various forks of the GNU/Linux kernel, sometimes even splintering it into highly specialized forks (e.g., Robert Love and real-time scheduler).
Throughout its evolution large companies such as IBM, SGI and even SCO (then Caldera) contributed code from various sources (e.g., the XFS filing system from SGI). Leaders in the kernel community such as Mr. Torvalds, Bruce Perens and Alan Cox have repeatedly stated that they are unfamiliar with any alleged copyrighted code that was added to the kernel without the express permission of the copyright holder. In fact, one of the benefits to an Open Source project such as GNU/Linux is that anyone can view the source code to see if these allegations are true. Mr. Torvalds and others have continually stated that they would remove any and all infringing code if and when SCO showed what it was. However Hades has neither frozen over nor has sausage learned to fly – SCO has been reluctant to list the specific code “stolen” from UNIXWARE and other SCO products. Additionally, the code that SCO has publicly produced (behind closed doors and with a bevy of NDA’s) has been either outdated or simply FUD.
What is also true is that as the use of Linux has grown so too has the license revenue from UNIX shrunk, however, what is not true is that “much of that same code” used in Linux is derived from these same proprietary Unices, unless evidence is released showing otherwise. With that said, I can state from both an investor and industry observer, SCO currently has no clear business model aside from lawsuits, the threat of lawsuits and when those have run their respective courses more lawsuits, or so has been the recent trend from SCO (this past week they sued Novell and sent threatening letters to companies like Just Sports USA.
1. The threat to the U.S. information technology industry. Our economic recovery appears to be well underway, but it is still fragile and could be thrown off track. Just as technology and innovation have led the U.S. economy during previous boom periods, many assume that this will happen again. But imagine a major new technology buying cycle in which revenue from software sales shrinks. Free or low-cost Open Source software, full of proprietary code, is grabbing an increasing portion of the software market. Each Open Source installation displaces or pre-empts a sale of proprietary, licensable and copyright-protected software. This means fewer jobs, less software revenue and reduced incentives for software companies to innovate. Why should a software company invest to develop exciting new capabilities when their software could end up “freed” as part of Linux under the GPL?
Ignoring the recovery rhetoric, Mr. McBride is still baseless in his insinuation that GNU/Linux is full of proprietary code. Additionally he commits yet another non sequitur in claiming that economic reality surrounding Open Source involves “fewer jobs, less software revenue and reduced incentives for software companies to innovate.” While various individuals might end up in other careers, software companies can still become profitable and even grow — as they move towards innovative business models in the services and education markets, Red Hat Inc. and MySQL AB are well-known examples of successful implementations of just this very thing.
And just because proprietary software is developed and placed on the market does not mean that consumers will find it valuable let alone a justifiable purchase. Mr. McBride has taken a note from proponents of the Labor Theory of Value, that a widget is valuable because X labor was used in its creation. Using a little touché, a free-market capitalistic system rests upon the individual and their subjective preferences, not a proto-Marxian interventionist scheme which stifles competition and erects inefficient and costly artificial barriers to entry.
Economic damage tot he U.S. software industry could have serious repercussions if this continues unchecked. International Data Corporation forecasts that the global software industry will grow to $289 billion by 2007. Beyond the economic stimulus provided by the software industry, U.S. sales taxes on that amount of software will be somewhere between $17 billion to $21 billion.
Our economy has already been hurt by offshore outsourcing of technology jobs. I’m sure you’ve seen this among your constituents. What if our technology jobs continue to move offshore at the same time the economic value of innovative software declines? For more than 20 years, software has been one of the leading examples of innovation and value-creation in our economy. When software becomes a commodity with nearly zero economic value, how will our economy make up for this loss?
Mr. McBride is certainly appealing to the politician’s pocket book; maybe SCO could synergize and become service oriented? As far as the mercantilist sound bites go, that is a topic for another discussion entirely.
Through the years, Congress has repeatedly dealt with the tough issues of predatory pricing and “dumping.” I contend that the ultimate predatory price is “free.” There is no more damaging example of dumping than the widespread availability of highly capable software that devalues intellectual property by making it available at no cost – in direct competition with the products from which it is derived.
Besides the fact that they still haven’t demonstrated that it was derived from the competitions, the WTO defines dumping as: “If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product.”
Since there isn’t some “Linuxistan” where it is not free, it cannot be considered dumping. As far as fixed prices go, hypothetically speaking, who would have the definitive say as to what to charge individuals for the Linux kernel? Linus? IBM? SCO? There is no committee that comes up with the pricing scheme for the kernel, it is simply free for consumption, so as long as you abide by the GPL guidelines.
The threat to our national security. I assert that Open Source software – available widely through the Internet – has the potential to provide our nation’s enemies or potential enemies with computing capabilities that are restricted by U.S. law. SCO’s UNIX software is subject to export licensing restrictions, and for good reason. With the powerful multi-processing features of UNIX software, someone could build a supercomputer for military applications. My company must adhere to these restrictions: we cannot sell to North Korea, Libya, Iran, Sudan and several other nations. But a computer expert in North Korea who has a number of personal computers and an Internet connection can download the latest version of Linux, complete with multi-processing capabilities misappropriated from UNIX, and, in short order, build a virtual supercomputer.
I know little Hebrew, but this sounds like some grand pile of stinking chutzpah. In fact, it’s as if his statement came right out of a World Weekly News report: Hackers Can Turn Your Computer Into A Bomb & Blow Your Family To Smithereens!
First of all, the only person allowed to proclaim that his product is a rogue supercomputer is Steve Jobs [insert pinky finger]. Darl McBride is a day late and a dollar short. John Q. Wang of North Korea could indeed erect a “virtual supercomputer” capable of beating chess grandmasters, fold protein packets at blinding speeds and scan the cosmos for ET and Will Robinson, but without hundreds of new processors, the threat of a DPRK-based supercomputer being added to the Top500 list is solely in the dreams of Mr. McBride. Additionally, even if some uber geek from North Korea had access to thousands of Itaniums, Opterons or G5s, cracking commonly used encryption schemes (such as SSL or AES) would still take years; the Distributed.net project illustrates the difficulty and time consuming process of hacking encrypted keys.
Ending on a melodramatic note, Mr. McBride states:
Our nation’s economic system is reflected in the concept and practice of Copyright. In 1980 and again in 1998, Congress took action to solidify the rule of copyright in the software industry. The GPL (which its authors call “copyleft” to emphasize that is is the opposite of copyright) should not be allowed to continue to undermine the foundation of one of our most important industries. I ask that you consider this very carefully in your role as one of our nation’s leaders.
QED. Apparently the entire system is facing a literal Blue Screen of Death unless the State acts right now, intervening on behalf of SCO and other hapless companies stuck between a rock, a hard place and the keyboard of a 20-year old programmer at the local college.
In all seriousness, the bellicose statements in this letter are, unfortunately, filled with the same Statist grandiloquence that plague both domestic and foreign markets around the globe. If nothing else, his “dumping” balderdash shows the sad state of affairs of what the “capitalistic system” has become.