Linux defense fund set up

SAN JOSE, Calif. — Tech giants Intel Corp. and IBM Corp. are among the contributors to a legal fund that will help companies running Linux software defray the cost of defending themselves against lawsuits.

The fund, which has so far received $3 million in pledges and is seeking $7 million more, was announced Monday by Open Source Development Labs, an industry group that aims to accelerate Linux's adoption by businesses.

The software's growth has been threatened by Lindon-based SCO Group Inc., which claims some of its intellectual property has slipped into Linux. SCO holds the rights to key elements of the 30-year-old Unix operating system from which Linux was inspired.

Unlike Unix or Microsoft Corp.'s Windows, Linux is developed by a worldwide community of programmers and distributed at little or no cost, making it especially attractive to penny-pinching corporations.

Linux supporters deny SCO's claims, but SCO has threatened to sue companies that use the software. So far, SCO has sued IBM, based in Armonk, N.Y., for breach of contract and has sent out warning letters to companies that deploy Linux.

"This fund sends a clear message that OSDL, in cooperation with others throughout the Linux industry, will stand firm against legal threats levied by The SCO Group," said Stuart Cohen, chief executive of OSDL.

SCO claims users of Linux, not the vendors, are left liable because of the wording of the license under which the software is freely distributed. Last fall, Hewlett-Packard Co. became the first major company to offer to indemnify its Linux customers in case of a lawsuit.

On Monday, Provo-based Novell Inc., which is preparing to complete its purchase of a Linux operating system company, said in a Bloomberg News story that it will pay some Linux customers if they are sued for copyright infringement.

Novell will pay 1.25 times the price of the software or $1.5 million, whichever is less, for companies who buy SuSE Linux AG's server-computer program, Novell spokesman Bruce Lowry told Bloomberg. Novell will complete its $210 million buy of SuSE "in the middle of the night," he said. The move steps up pressure on IBM to also indemnify clients, analysts said.

"Novell is really becoming the powerhouse for Linux," said Rob Enderle, an analyst at Enderle Group in San Jose, Calif. "This really increased the pressure on IBM to indemnify. Every time another software or computer vendor does this, it makes it harder for IBM to not offer it."

In a statement Monday, SCO repeated that it has a responsibility to protect its intellectual property. The company also said it expects to begin suing Linux users by the middle of February.

"The actions of these vendors today doesn't change the fact that SCO's intellectual property is being found in Linux," SCO said.

In the IBM case, SCO was ordered last month to produce evidence of infringement. The next hearing in that case is scheduled for Jan. 23.

Shares of SCO fell $1, or nearly 6 percent, to close at $16.10 Monday on the Nasdaq Stock Market.