Novell indemnifies Linux users, completes SUSE buy

Posted on 13 Jan 2004 at 14:44

Novell says it will back its Linux users against IP litigation after completing SUSE buy - SCO's McBride agrees.

Novell has completed its $210mn cash acquisition of the number two Linux vendor, SUSE, opening the way for IBM to make its promised $50mn investment. The company says it will also indemnify its customers against 'certain intellectual property challenges to Linux'.

Novell follows HP in offering its Linux customers an indemnification. Nitin Maru, Novell's VP of legal affairs in EMEA, told us: 'Novell's indemnification is stronger in a couple of ways. HP's program only applies to the SCO dispute, whereas ours applies to all third-party copyright infringement. Secondly, it is more liberal than HP's indemnification, which only applies to HP products. We don't care what hardware the software is used on. [Our customers] can apply for indemnification of SUSE Enterprise Server 8 no matter what box it's running on.'

Currently the indemnification programme only extends to users of the Enterprise Server 8 product, but the indemnity will continue to be offered beyond the SCO dispute. Peter Joseph, Director of Corporate Strategy at Novell said: 'It's a permanent programme vis a vis Enterprise Server 8. We are considering other products such as Ximian, but there are currently no plans.'

The company will also announce a program for users of SUSE products other than Enterprise 8 to apply for the same indemnification. There will be no financial costs, said Joseph. 'The only cost, as such, is having the support and upgrade options with us.'

Maru confirmed that the indemnification wouldn't involve buying a SCO Unix IP licence for customers. 'We're going to defend litigation. We'll settle,' he said. 'It's really a side issue - an insurance policy - our customers shouldn't need to be concerned about this,' added Joseph.

SCO's CEO Darl McBride should be happy at the move. In a response to the Open Source Development Labs' announcement that it had founded a Linux litigation defence fund to the tune of $3mn, he said: 'If vendors feel so confident with the intellectual property foundation under their massive contributions into Linux, then they should put their money where their mouth is and protect end users.'

But Novell's beefier indemnification programme is in part made possible by the company's assertion that, as a previous owner of Unix, in its sale of Unix it retained certain Unix rights, including rights 'to license Unix technology... [and] to authorize its customers to use that Unix technology in their internal business operations.'

Maru also said that Novell retains rights for itself and its customers to 'correct' any instances of infringement, although he maintained Novell's position that SCO's claims of IP infringement are baseless.

SCO, conversely, asserts that there are no outstanding rights, licences or IP retained by Novell in its sale of Unix to SCO, bar Novell's own Unix licence which only goes so far as to allow the use of the 'licensed technology only for internal purposes, or for resale in bundled or integrated products sold by Novell which do not directly compete with the core UNIX products of SCO.'

SCO claims that with the SUSE buy, Novell has moved into direct competition. However Maru said: 'SCO is only focussing on the first part of the paragraph. The second part says this paragraph is not valid if the company is sold.' Indeed, the agreement reads: 'The license agreement shall also provide Seller with an unlimited royalty-free, perpetual, worldwide license to the Licensed Technology upon the occurrence of a Change of Control of Buyer.' And of course, Novell argues that this is indeed the case.

Author: Matt Whipp