SCO targets DaimlerChrysler, AutoZone with lawsuits

The SCO Group has filed its first lawsuits against enterprise Linux users, targeting automaker DaimlerChrysler and auto parts retailer AutoZone.

In an announcement made late Wednesday morning, Lindon, Utah-based SCO said it would file suit later in the day against DaimlerChrysler in Oakland County Circuit Court in Michigan.

That lawsuit alleges that DaimlerChrysler violated its software licensing agreement with SCO by refusing to provide a requested "certification of compliance" as part of a software audit. The suit asks the court to permanently bar the automaker from further violations of the software agreement and seeks an injunction requiring it to "remedy the effects of its past violations" of the agreement.

The suit seeks undetermined damages. SCO officials were slated to discuss the legal action during a conference call at which they also planned to talk about the company's latest earnings report.

Earlier Wednesday, in a separate announcement, SCO said its suit against AutoZone alleges that the retailer violated SCO's Unix copyrights through its use of Linux. That suit charges that AutoZone is "running versions of the Linux operating system that contain code, structure, sequence and/or organization from SCO's proprietary Unix System V code in violation of SCO's copyrights."

With this lawsuit, SCO is kicking off what it said late last year will be an offensive against companies using Linux in their businesses. SCO sued IBM Corp. last March in a suit that now seeks at least US$5 billion in damages, alleging IBM illegally contributed some of SCO's System V Unix code to the Linux open-source project. IBM has countersued.

AutoZone is an IBM customer, using IBM's content management and DB2 database applications, and a former Red Hat Inc. Linux customer, having used Red Hat Linux for its in-store intranet system.

Red Hat Inc. spokeswoman Leigh Cantrell Day acknowledged Wednesday that AutoZone had been a Red Hat customer until "several months ago."

The lawsuit, filed in U.S. District Court in Nevada, seeks undisclosed damages and a court injunction to prevent AutoZone from continuing to use or copy any part of SCO's copyrighted materials.

A spokesman for Memphis-based AutoZone couldn't be reached for comment early Wednesday. An IBM spokesman also couldn't be immediately reached.

AutoZone was a SCO customer as recently as 2002 and once ran SCO Unix on point-of-sale systems in its approximately 500 stores around the country.

SCO chose Wednesday -- when both it and AutoZone announce their quarterly financial results -- to file its lawsuit.

In response to the lawsuit, the nonprofit Open Source Development Labs Inc. (OSDL) in Beaverton, Ore., reiterated its standing offer of help to AutoZone and any future targets of lawsuits from SCO through its open-source legal defense fund, which was established in January.

"The entire Linux ecosystem, including OSDL and its 35-plus member organizations, will stand firm against any legal actions against Linux end users made by the SCO Group," Stuart Cohen, CEO of the OSDL, said Wednesday in a statement. "This is why OSDL announced our defense fund in January. SCO's decision to move forward with (its) end-user lawsuit is unfortunate, but due to the questionable merits of the case, we see no reason why this case will have an impact on the growth of Linux in the enterprise."

The defense fund, which has collected more than $3 million toward its goal of $10 million, was set up by the OSDL to help defend Linux users from copyright-infringement lawsuits that might be filed against them by SCO.

For the first quarter of fiscal 2004, SCO posted revenue of $11.4 million, compared with $13.5 million one year ago. SCO reported a net loss to common stockholders of $2.25 million, or 16 cents per diluted common share, compared with a net loss to common stockholders of $724,000, or 6 cents per diluted common share, for the same quarter last year.

In a statement, SCO President and CEO Darl McBride pledged to continue the company's intellectual property fight.

"In coming quarters, we will continue to expand our SCOsource initiatives, with an ongoing campaign to defend and protect SCO's intellectual property assets, which will include continued end-user lawsuits and negotiations regarding intellectual property licenses," McBride said. "At the same time, we are committed to supporting our extensive Unix customer base and leveraging our Unix business for future growth opportunities."

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