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Novell Offers Linux Users Legal Indemnity 271

Posted by timothy
from the linux-indemnity-is-the-new-black dept.
Anonymous Coward writes "Novell today said it intends to indemnify its enterprise Linux users against possible legal action by The SCO Group and/or others. According to eWeek Novell's new Linux Indemnification Program is designed to provide its SUSE Enterprise Linux customers with protection against intellectual-property challenges to Linux and to help reduce the barriers to Linux adoption in the enterprise. Under the terms of the program, Novell will offer indemnification for copyright infringement claims made by third parties against registered Novell customers who obtain SUSE Enterprise Linux 8 after January 13, 2004, upgrade protection and a qualifying technical support contract from Novell or a Novell channel partner."
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Novell Offers Linux Users Legal Indemnity

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  • does it seem like.. (Score:4, Interesting)

    by Anonymous Coward on Monday January 12, 2004 @09:41PM (#7958446)

    Novell is using this as a chance to get support contracts thrown in with this protection?
  • Let me guess:

    Novell's trying to cash in on SCO's bad manners!

    Well, you can't indemnify someone without contract of some sort, and buying and installign software with a EULA that has that clause would be a good way to do it.

    But in all fairness I officially downgrade Novell from an alert level of Double Plus Good to Plus Good. The SCO alert level remains fixed at Double Plus Ungood. Verner's is still tasty. Further news as events warrant.

    -Adam
  • by Rosco P. Coltrane (209368) on Monday January 12, 2004 @09:49PM (#7958521)
    And you think they bought SuSE because ...?
  • by phr1 (211689) on Monday January 12, 2004 @09:52PM (#7958538)
    If SCO (and imagine Microsoft doing the same thing later on) have managed to create enough FUD for users to be afraid of using free software unless identified by some company, that already undermines the goals of free software pretty badly. Being able to download, modify, and redistribute software with the author's permission isn't all that attractive if SCO has made you feel threatened by legal hassles for doing it. You no longer get the freedom from bureaucracy, hassles, per-seat fees, and so forth that the free software developers labored to bring you.

    We shouldn't celebrate just because indemnification is available and say it solves the problem. That SCO has created demand for such indemnification is already a big problem. And of course companies offering indemnification have a vested interest in creating more such demand. They're not doing anything bad by offering it, but neither is it completely in the interests of free software for everyone to jump on it. It's more complicated than that and we have to keep the issues clear.

  • by ikekrull (59661) on Monday January 12, 2004 @09:53PM (#7958548) Homepage
    Am I wrong, or would 95% of each $699 SCO license fee go to Novell, since they retain ownership of Sys V UNIX?

    Theres something fishy going on with SCO and Novell, with Novell coming out of this smelling like roses - I have to wonder if this whole SCO sham is simply a way to boost Novell's image as ' a good guy' at the expense of a company that was insignificant and dying anyway (SCO).

    Anyone else finding it difficult to understand these dealings?

  • Re:ARGGHHH... (Score:5, Interesting)

    by cadfael (103180) on Monday January 12, 2004 @09:53PM (#7958549) Homepage Journal
    Unfortunately, for the same reason that the folks over at SCO keep on yakking...public perception. At this time, there is less than a small chance that the SCO lawsuit will bear fruit as it exists now, but the folks driving the bus keep on spouting. The result? The price stays high, goes higher, doesn't drop as much as it could. When other PR comes to light, they suffer. At this moment, in after hours trading, they are down $1.32. All the stories linked to the pages where I get the SCO price are about indemnification and the OSDL defence fund. Investors on a stock like this can read the review and be rattled. Thus, the PR here will probably be countered tomorrow with more PR from SCO.
  • Re:What a surprise (Score:5, Interesting)

    by rendler (141135) on Monday January 12, 2004 @09:57PM (#7958579)
    What happens if SCO wins? No one at the moment can say that they won't. If that happens Novell stands to loose A LOT of money from the indemnification alone. No business, especially not one as big as Novell would do something like this just to get a few extra upgrade sales from a few of their customers.
  • by Pharmboy (216950) on Monday January 12, 2004 @09:59PM (#7958596) Journal
    And you think they bought SuSE because ...?

    I would agree. Its ironic. Everyone is talking roses about them because even Novell says they are smoking crack. Then they put their money where their mouth is and offers protection for their customers (they can't offer protection for NON customers, there is no contract to protect, duh).

    And now everyone is comparing them to MS.

    It doesn't strengthen SCOs case, it demonstrates that SCO doesn't have one. They just called SCO's bluff because they can, for free. Indemnifying customers of legal action against SCO is like offering life insurance for your pet rock: There is little fear you will ever need to exercise the right and collect on it.

    If they make some money, too, great. Since they just invested $210 million in open source software, I hope they make a wad.
  • by Camel Pilot (78781) on Monday January 12, 2004 @09:59PM (#7958600) Homepage Journal
    You gotta love how Forbes always get it wrong. This Forbes article [forbes.com] by Reed Stevenson

    quotes

    SCO also warned companies that they must pay to use Linux, which is based on the proprietary Unix operating system, or face litigation.


    Emphasis mine of course.

    Where does Forbes hire their journalist from? The local high school.

  • only cash flow ? (Score:1, Interesting)

    by Anonymous Coward on Monday January 12, 2004 @10:03PM (#7958631)
    What about the money from Bill Gates that comes via his wife's roundabout purchases of SCO stock which SCO insiders are selling ?
  • by gcaseye6677 (694805) on Monday January 12, 2004 @10:04PM (#7958634)

    If indemnification makes people more likely to adopt open source software in the short term, it is a good thing. Yes, it will suck for smaller software companies that can not afford indemnification, but as more companies realize that open source is not as scary as Microsoft wants them to believe, its usage will pick up dramatically. For large companies, the savings in software licensing fees could pay for all the legal representation they need to defend their open source usage and distribution. Once the SCO case falls apart and potential copycats realize that extorting money out of free software users is harder than it appeared at first, such lawsuits, along with the fear of being sued, will drop off.
  • Re:it seems (Score:3, Interesting)

    by plierhead (570797) on Monday January 12, 2004 @10:06PM (#7958657) Journal
    No doubt Novell, IBM et al have made these funds knowing full well that SCO will never see any of that money because they will never really challenge anyone in court if they can help it.

    IBM and Novell want to see this SCO bullshit hit the courts as soon as possible. What they don't want is this albatross hanging around the necks of their linux business. Up until now, SCO could just sit there and let the FUD fester - now IBM and Novell have neutralised the FUD.

    The key to understanding all of these corporate moves is always to put yourself in the shoes of the person who has to answer the questions from the god-like beings in the boardroom. YOu can tell them until you're blue in the face that SCO's antics are bullshit - all they think about is the risk of THEM being sued because someone talked them into using that crazy commie software.

    Now you can say to them "Don't worry, IBM will lend us their lawyers if it does come to a fight".

    The turd that is SCO has been dislodged and is starting its long slow slide down the crapper.

  • by Anonymous Coward on Monday January 12, 2004 @10:08PM (#7958671)
    If any one company provides security directly, it means all linux versions are safe to purchase. Isn't it?

    No. Do you mean that a successful defense by Novell of a suit against one of their customers can be leveraged by non-customers? Maybe, but what if SCO doesn't sue an indemnified Novell customer first, but instead sues a non-customer? Novell has not indemnified them, so this announcement cannot make it safe, if it wasn't before.

    On a different note, doesn't purchasing indemnification remove some of the benefit of using Open Source Linux? I have heard that, for example, with HP's indemnification offer, your protection is voided if you modify your Linux (at the source level) in any way. You have to use what they provide. You may or may not be able to recompile your kernel in order to change some settings, but any patches must be acquired through the official distribution channels. This is obvious because they cannot offer indemnification for something over which they have no control (patches they haven't approved).

    For some companies, this will be fine, and they can trust that Novell or HP will provide up-to-date software, security and bug fixes, etc. to meet their needs. But the true freedom and control that is supposed to be a benefit of Free Software is reduced.
  • by zurab (188064) on Monday January 12, 2004 @10:16PM (#7958718)
    Think of SCO as the terrorists of Linux. Novell is offering protection ...


    So ... either pay Novell the "protection" or SCO will "blow up" your workplace? I am a SuSE user but, quite frankly, this indemnification business is getting too messy. Nobody that I know of has started becoming scared of SCO or paying their license fees, or ditched Linux. If Novell believes SCO is making false accusations, they can follow RedHat and simply sue SCO right there in Utah! They now own SuSE and they have every right to shut SCO up.
  • by rsilvergun (571051) on Monday January 12, 2004 @10:28PM (#7958798)
    must be laughable. Why else would there be all these indemnification announcements today? I figure Novell knows some things we don't (yet). I'm looking forward to the end of SCO.
  • by mrscott (548097) on Monday January 12, 2004 @10:28PM (#7958799)
    SCO has been saying for quite a while that companies should indemnify their users if everything thinks that SCO doesn't really have a case. Novell did it, albeit with some catches, which I think are completely reasonable. While Novell has been lauded as of late as the good guy (which I still think they are), it's important to remember that they are still a business, just spent a whole lot of money buying Ximian and SuSE and need to make money to keep going. Yeah - Linux is "free" and all that, but when a company like Novell puts their support behind it, there IS going to be a cost.
  • If I were Microsoft (Score:4, Interesting)

    by mcc (14761) <amcclure@purdue.edu> on Monday January 12, 2004 @10:40PM (#7958873) Homepage
    Right now, I would do an incredibly happy little dance.

    Then I'd wait six months for the SCO thing to blow over.

    Then I'd sue, for tiny, legally incoherent reasons, a large quantity of different Novell linux customers. The reasons would be randomly selected, and different in each case, and occationally perhaps be pumped through shell companies. But Novell, having offered legal indemnification, would have to research and respond to each one at great cost on its customers behalf. Then I'd just sit back, attempt to stall these cases as long as possible, and quietly drop every single one just before it actually got into a courtroom.

    I'd piss money down the drain by doing so, but hey, I'd force Novell to piss as much or more away in the process-- and since I'd be Microsoft, I'd be able to afford this. Possibly to the point where Novell would take serious damage without me having to break a sweat. Meanwhile, Novell's Linux customers would inevitably be a bit spooked by this, and some number would ask Novell if they could use one of Novell's linux-free, more antiquated alternate products instead.

    MS might not do this, and it might not really be something that is realistic from their viewpoint (since someone might notice them perofrming widespread abuse of the legal system, which might get them the dreaded 'vextatious litigant' label). But if you don't think that it's something they'd be WILLING to do, then you probably also believe that line about "It doesn't MATTER if the Xbox is staggeringly unprofitable! This isn't a trust-like, illegal, or maliciously anticompetitive action! They're just taking the sound business strategy of taking massive losses now so that someday later, the XBox-3 can be somewhat profitable (or perhaps the XBox-4)!"
  • by Pharmboy (216950) on Monday January 12, 2004 @10:45PM (#7958910) Journal
    I think his main point, and I would agree, is that indemnification is only a short term solution to a short term problem. Once all this played out with SCO in court, indemnification will not be needed. If a company has enough faith that SCO is wrong, it is worth the risk to them for "insurance" policy to gain new customers. If the support contract isn't a good value by itself, then the temporary freebee of an indemnification clause will make little difference in their sales.

    Obviously to any group that is not profit group distributing Linux (Debian, etc.) indemnification is not possible, but most people who use Debian aren't buying support contracts from anyone, at any price. Most Debian (or Gentoo, or Slackware...) users are more aware of the problem, and feel confident that SCO can't win because they have no claim. Its also a different culture, with a bigger focus on "free as in speech/beer", rather than "how will this generate profits and create jobs to grow the business" concerns.

    Corporate users are different because decisions are made by committee, not a single hacker, and done for the benefit of shareholders, employees, managers and customers. They have entire departments for IT, and they are more interested in running stable, reliable, supported networks than cutting edge. The needs, culture and expectations are just different.

    I have used RedHat for several years, and paid for the support, on a few servers. Their recent policies are forcing me to consider changing vendors. Indemnification alone would not get me to switch, but I can see how it is a benefit on alongside SuSe, a very popular corporate distro, and one that I am considering. If its "icing on the cake" and SuSe puts out the best _product_, and they are honest in how they market indemnification, then I see this as a good move to push Linux in the mainstream, by removing barriers in the marketplace, ie: concern over the future of Linux.
  • by stewball (83006) on Monday January 12, 2004 @10:53PM (#7958996)
    I would bet a big chunk of my liquid assets (that's right folks, my BEER) that the nature of the indemnification will be limited to claimed infringements of intellectual property by third parties holding rights to the original Unix (for lack of a better term), and relating specifically to intellectual property rights associated with the original Unix, and not much else.

    Nobody, and I mean nobody, provides indemnification for claims of any kind by any party, no matter how they arise. That's a really damn fine way to go out of business, in which case ain't no indemnification nohow.
    -----
  • by spitzak (4019) on Monday January 12, 2004 @10:54PM (#7959002) Homepage
    Because such actions reinforce stupid decisions by legal departments such as yours.

    If it becomes standard that you cannot buy or use code without "indemnity" then you have made it impossible for an independent code writer to write a program and have people use it. This is irrelevant to open source, what you have pretty much said is that writing code is the realm of big business and that start-ups and free enterprise and just the desire to tell people about solutions you have figured out have become illegal.

    This goes far beyond Linux. Linux is now being protected by big money interests in the same way Windows is. But the next genius grad student who writes the "Linux-killer" operating system is going to be out of luck, as everybody who he shows it to is going to say "but you have no idemnity, so I'm going to have to stick with Linux..."

    Even people who think Linux is the end-all of software should realize that this means the death of applications for Linux from independent authors, since they cannot "idemnify" their code. And Windows fans should realize this means the death of all the Shareware and Freeware and open source software, and also the few remaining tiny software vendors, all of who cannot afford "idemnification" either.

    I don't care if this action causes SCO to go bankrupt tomorrow, this is a bad precedent for Novell to do this.
  • by gmac63 (12603) <gmac63 AT charter DOT net> on Monday January 12, 2004 @10:55PM (#7959012) Homepage
    I had a question regarding "derivative works" and googled "Xenix". Here's what I found:


    Xenix

    (Redirected from XENIX)

    Xenix was Microsoft's version of UNIX for microprocessors. Microsoft called it Xenix because it could not license the "UNIX" name.

    Microsoft purchased a license for UNIX 7th Edition from AT&T in 1979, and announced on August 25, 1980 that it would make it available for the 16-bit microcomputer market. Xenix was not sold directly to end users; Microsoft licensed it to computer manufacturers who then ported it to their systems. The first ports of Xenix were to the Zilog Z8001 16-bit processor.

    Altos shipped a version for their computers early in 1982, Tandy Corporation shipped one for their 68000-based systems in January 1983, and Santa Cruz Operation (SCO) released their port to the Intel 8086 processor in September 1983.

    Xenix varied from its 7th Edition origins by incoporating elements from BSD, and soon possessed the most widely installed base of any Unix flavor due to the popularity of the inexpensive x86 processor, even though the port created for Tandy computers proved to be more robust.

    When Microsoft entered into an agreement with IBM to develop OS/2, it lost interest in promoting Xenix. Microsoft transferred ownership of Xenix to SCO in an agreement that left Microsoft owning 25% of SCO. However, Microsoft continued to use Xenix internally, submitting a patch to support functionality in UNIX to AT&T in 1987, which trickled down to the code base of both Xenix and SCO UNIX. Microsoft is said to have used Xenix on VAX minicomputers extensively within their company as late as 1992.

    SCO released a version of Xenix for the Intel 286 processor in 1985, and following their port of Xenix to the 386 processor, a 32-bit chip, renamed it SCO UNIX.


    What if......

  • by coolmacdude (640605) on Monday January 12, 2004 @10:56PM (#7959030) Homepage Journal
    The fact that stuff like this is even being considered shows that SCO's tactics are working, and that is not a good thing. Think about it, companies would not take steps like this unless they thought there was a credible threat to Linux. Everyone on Slashdot knows that SCO's claims are such utter bullshit they stand no chance of ever prevailing in a court of law. To the average Joe however, SCO might own half the Linux kernel. Heck look at the "experts" on Wall Street. We've seen it before though. Keep up a constant drumbeat of lies in the press and people will believe it.

    In a larger context, this is just one of the symptoms of the copyright witchhunt of the past few years. The RIAA, MPAA, etc. have attempted to curtail freedoms in media by publishing absurdly inflated loss figures due to unauthorized use and threatening legal action to those who don't use media exactly the way they want. Now SCO threatens to bring the same restrictions to open source software by scaring people with even more ridiculous claims than the media giants and shoving "PIRACY!!!" down everyone's throat.

    The only way this is going to stop is to educate more people on why SCO poses no real challenge to Linux and has no right to any of its components. And instead of continually putting out a deluge of SCO press releases, the major media outlets need to play a little more fairly and let the other side speak a little louder.
  • by phr1 (211689) on Monday January 12, 2004 @10:57PM (#7959042)
    My concern is that the problem indemnification addresses is a LONG-term problem. The SCO suit is just a short-term instance of the long term problem. Wait til Microsoft tries something similar.

    An organization like Debian can't itself offer indemnification, but perhaps it could work with an insurance policy to offer indemnity policies to people wanting to buy them. However, the closest to a real solution would be for Darl and company to see jail time and dissuade others from running similar scams. But it just isn't likely.

  • by Anonymous Coward on Monday January 12, 2004 @11:04PM (#7959116)
    Lyons used troll posts from previous articles as sources (I don't remember if the trolls were on Groklaw, Yahoo, here, or elsewhere offhand). I don't consider what he's been doing of late to be anything resembling journalism. First he swallowed SCO's press releases hook, line & sinker. Then when he was corrected for not doing any research, he got pissed and did that "FSF are the Open Source Hitmen" article (that phrasing may not be quite right, but I believe that he did call the FSF "hitmen"). After that, he degenerated to citing troll posts making vulgar comments about Ms. Didio's name as sources... I have yet to figure out how anyone at Forbes could consider that news? Oh wait--he also read Groklaw's sponsors link & found out that the people they're hosted by have received donations from IBM in the past. Wow, that took what? Five minutes of Google? Clicking the nice sponsor link on Groklaw? Maybe a few mouse clicks? I sure hope that all Forbes "journalists" aren't so lazy. I would think that if that demonstrates the depth of their research, I would seriously reconsider the value of their input into managing my finances...

    At least Ackerman has issued one correction (see Yahoo SCOX message boards) on one of his articles--he mentions that a previous article misstated SCO's rights to UNIX. That's like, almost journalism! I mean, correcting some provably wrong fact (like the statement that SCO owns UNIX when it has none of the patents and Novell is contesting the copyrights...) is at least a step in the right direction.
  • by NullProg (70833) on Monday January 12, 2004 @11:05PM (#7959126) Homepage Journal
    At the corporate SuSE, level just state that SCO has no case. Be honest and state again why SCO has no case. Why are you grabbing for bucks with this non-sense. If there is no violation, then there is nothing to indemnify in SuSE Linux (speaking as a programmer from a company that just did 5 SuSE 9.0 purchases/installs within two weeks). As a SuSE buyer (I didn't say downloader) since 6.4, why are you not concered about the end user? Are you stating that SCO is correct?

    If you want to indemnify customers, how about a notice that states Novell/SuSE will be around for the long term. You will not go against Microsoft, but aim for interoperability. How about a statement that says we will provide an end user solution (Me) as well as a verticle Enterprise one (Me again with clients).

    Nullprog,
  • Melinda Gates (Score:4, Interesting)

    by Anonymous Coward on Monday January 12, 2004 @11:19PM (#7959266)
    here ya go [weblogs.com] Melinda Gates connection to SCO. Courtesy of GrokLaw
  • Pick 'em (Score:3, Interesting)

    by mrkurt (613936) on Monday January 12, 2004 @11:29PM (#7959363) Journal
    Novell's move will turn out to be either brilliant or incredibly stupid. They will either get the jump on migration to Linux by small and medium enterprises, or they make themselves very vulnerable to litigation if SCO prevails. But they are calling SCO's bluff of "if we're wrong, how come nobody is indemnifying their customers?" Call me a karma whore, but I admire their chutzpah.
  • by stewball (83006) on Monday January 12, 2004 @11:49PM (#7959500)
    How do you figure that?

    You're still free to modify the software, but it would be patently unreasonable to ask someone else to cover your butt if you make changes or implement changes other than those that the indemnifier would provide.

    You can still get under the hood and add the nitrous, but you can't sue Honda when you wipe out because you burned through the brakes trying to stop at the end of the street run.
    -----
  • by Anonymous Coward on Monday January 12, 2004 @11:52PM (#7959515)
    1. I bought a copy of Caldera eDesktop in 2001.
    2. SCO bought Caldera at some stage down the track.
    3. By agreeing to the licence in eDesktop (granting me permission to re-distribute, modify) wasn't Caldera (SCO) opening me up to litigation? As a consumer (Australian Law), aren't I entitled to protection from such litigation? After all, I was using the product as per the manufacturer's instructions!
    4. Shouldn't SCO be responsible for providing the protection? That is, have Caldera/SCO been reckless in providing me with a product that opens me up to litigation when used in the way the manufacturer intended?

    I'd ask SCO, but they have no "contact us" on their support site....

  • by gcaseye6677 (694805) on Tuesday January 13, 2004 @12:16AM (#7959684)
    I think the fact that indemnification is being offered at all is rather convincing for a lot of corporate executives, even if their company is not actually indemnified by a vendor. What I mean is, when a CxO sees that respected industry leaders like IBM, Intel, Novell, RedHat and others say that they will cover the legal bills of any customer that gets sued, they assume that the SCO case must be weak. Why else would these companies put themselves on the hook for what could otherwise be millions of dollars in attorney fees? If they perceive the chance of being sued as very remote, they are a lot more likely to invest in Linux, even if there is still a small chance of a lawsuit. Remember, any company that is producing or selling anything takes risks of being sued as a result of their everyday operations. And like I said earlier, for largish companies, the savings in Microsoft licenses could pay all the legal fees they would ever encounter from Linux use.
  • Overreaction (Score:3, Interesting)

    by salesgeek (263995) on Tuesday January 13, 2004 @07:53AM (#7961442) Homepage
    After reading a few posts here, if you are thinking that Novel's indemnity somehow helps SCO you are very wrong. Here is the situation:

    SCO is trying to sell people property that belongs to someone else. If you buy a Linux licence from SCO you are buying a share of swampland in a national park or a share in the Brooklyn Bridge.

    Novell and HP are simply playing to the market. Buy from us because we will defend you from the biggest con in the computer industry since... since British Telecom tried to claim they owned the hyperlink. It's a marketing ploy and HP and Novell both know they'll never have to deal with more than one lawsuit.
  • by emtboy9 (99534) <jeff @ j e f flane.org> on Tuesday January 13, 2004 @08:40AM (#7961576) Homepage
    And I guess I made a good guess ;)

    Yesterday, I posted this comment regarding the $10 Million Defense Fund [slashdot.org] and today, Novell announces their indemnification plan. I shoulda been an investment banker.

    Seriously though, this made me think about something after reading the article. I havent checked out the specific agreement from Novell, but it is a step in the right direction, IMHO. However, it occured to me that this would be a great way to put a linux company out of business...

    As litigous as SCO is, lets say for the sake of arguement that the Novell program takes off, and they get 10,000 new customers under the program.

    Then SCO turns around and files suit against 50% of that group. That is now, if I understand it correctly, 5000 lawsuits that Novell will have to contend with, in addition to already pending litigation concerning the purchase of SuSE in the first place.

    Seems to me that this program, and others like it, while a Good Thing[tm], could be used against the company providing indemnification. SCO doesnt even have to win, they just have to file enough suits to tie Novell's money up in court for months...

    Damn me for understanding evil.

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