Musings on Software IP Law
July 11th, 2009 by NumberSix

scales_of_justice2One of the rather interesting by-products of the flawed intellectual property regime in the United States (I refer mainly to patent law, but I suppose that is just the subset of IP law that is most problematic) is that there are companies in the U.S. that exist solely to pursue lawsuits. One such company was Caldera Systems/The SCO Group. Caldera was formed in 1994, and its first product was Caldera Network Desktop, a Linux distribution targeted at business users and containing a few proprietary add-ons. In 1996, the company acquired DR-DOS, a DOS-compatible operating system, from Novell. In 2000, it acquired several UNIX properties from the Santa Cruz Operation (SCO), including OpenServer and UnixWare, and Caldera changed its name to The SCO Group to emphasize the change in focus. Shortly after changing its name, SCO began to claim that Linux “contained SCO’s UNIX System V source code and that Linux was an unauthorized derivative of UNIX.” SCO sued IBM for 1 billion dollars and demanded that Linux users pay them an end user license fee. As revenues declined, the company began to focus more and more on suing ex-customers. Subsequently, the SCO Group sued two former customers (AutoZone and DaimlerChrysler). In SCO v. AutoZone, SCO claimed that AutoZone violated SCO copyrights by using Linux. In SCO v. DaimlerChrysler, SCO claimed that DaimlerChrysler breached its UNIX license contract by inappropriately using derivative works of UNIX and by refusing to respond to requests for certification of compliance by SCO. SCO’s suit against DaimlerChrysler was dismissed in 2004. Novell, from which The SCO Group claimed to have acquired its UNIX intellectual property rights, claimed that it had not sold the copyrights to SCO and that Novell retained them. In response, SCO sued Novell for slander of title. On August 10, 2007, Judge Dale Kimball, in the SCO vs. Novell case, ruled that “…the court concludes that Novell is the owner of the UNIX and UnixWare Copyrights.” Novell was awarded summary judgment on a number of claims, and a number of other claims by SCO were denied. In addition, SCO was ordered to pass on to Novell an appropriate portion of income relating to SCOSource licences to Sun Microsystems and Microsoft. About a month later, SCO filed for Chapter 11 bankruptcy. Revenues from their products had been declining for some time and perhaps bankruptcy was inevitable, but I can’t help but think that maybe Caldera/SCO could have avoided this fate if they concentrated on writing good software rather than trying to sue ex-customers and Linux users.

On the other hand, maybe suing people for copyright/patent infringement is the way to go. Today I came across this message board posting about the last nail in Commodore Business Machine’s coffin. Anyone who lived through the 1980’s and wasn’t living in a broom closet probably remembers Commodore’s salad days. Since 1977, Commodore had been selling home computers like the PET, VIC-20 (1981), Commodore 64 (1982), and C-128 (1985). By ruthlessly cutting their prices, Commodore was able to drive their competitors out of the home computer business, and by 1984, it was a billion dollar company. The company soon began to flounder, however, as a result of bad management and a failure to successfully market their next-generation computer, the Amiga. A desultory attempt to sell IBM PC clones in the late 1980’s was also largely a failure. By the 1990’s, the company had fallen on hard times. Productivity users were choosing Intel-based machines and Macs over Amigas. The C-128 had been discontinued in 1989, and although the C-64 was the biggest-selling computer of all time, sales were declining (it was discontinued in 1992). The company staked its future on the CD32, which was the first 32-bit gaming console. The message board posting linked to above tells the rest of the story:

Apparently Commodore-Amiga owed $10M for patent infringement. Because of that, the US government wouldn’t allow any CD-32’s into the USA. And because of that, the Phillipines factory seized all of the CD-32’s that had been manufactured to cover unpaid expenses. And that was the end. Commodore-Amiga had basically gambled everything on the CD-32 being the platform that would save the company. And when they couldn’t bring any into the US, it was clearly Game Over.

But that’s far from the most interesting part of the story of Commodore’s demise. What is really interesting is that the patent which they had been found to be infringing was a software patent for exclusive OR-ing (XOR):

The XOR patent covers the use of the machine language XOR (exclusive-or) operator to make a cursor blink in a bitmapped display. This is at the top of many lists of the most ridiculous software patents. For one thing, it’s an obvious idea that might arise in the mind of a moderately intelligent software developer in the course of an afternoon or less. A given software program is composed of hundreds of thousands of such ideas; it would be absurd to grant patent privileges to each such idea. But that’s exactly what the US Patent Office did, and, so far as I know, keeps on doing. The only reason why this hasn’t brought software development to a halt is that usually such patents aren’t enforced anyway; companies just patent everything they can thing of to protect themselves from other companies doing the same thing. But in the case of the XOR patent, the originating software company, was basically going defunct, but some lawyers saw this one patent as their key to riches, so they bought the company for a few bucks just to capitalize on that patent. So they had nothing to lose, and everything to gain, from vigorous enforcement of an absurd patent.

I seem to recall reading something about a member of Commodore management who traveled to the headquarters of the company that had sued them for patent infringement. He claimed that they had laid off all the engineers and now the company consisted entirely of lawyers.

Anyway, these are some factoids that I find interesting on this Saturday afternoon…and it’s probably proof that I spend way to much time in IRC with other technologically oriented people.

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