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Novell Offers Liability Shield for SUSE Linux

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Novell said it would indemnify its customers against potential intellectual property challenges to its SUSE Linux version, in the face of SCO Group’s copyright challenge of some parts of the Linux operating system code.

The Provo, Utah-based network software maker, which Tuesday completed its $210 million
acquisition of German-based SUSE, said the protection only applies to certain products such as
SUSE Linux Enterprise Server 8 and only under certain

Novell spokesperson Bruce Lowry told the
was not motivated by any particular company. Novell’s move comes amid SCO Group’s lawsuit against IBM over whether Big Blue let select parts of SCO Group’s copyrighted UNIX code into the open source operating system.

“What indemnification does is address the problem and give our
customers a measure of protection against copyright challenges,” Lowery
said. “We have a distribution and now we have unique legal rights over
issue of the business.”

Novell also said it plans on announcing a special program where
users who are not currently its SUSE LINUX customers can stand under
company’s umbrella indemnification program.

“We believe our new Linux indemnification program, supported by our
unique legal rights, will provide enterprise customers with one more
to include Linux in their information technology plans,” Novell
chairman and
CEO Jack Messman said in a statement.

Linux and other open source platforms are
very popular with companies because of their low-cost and the ability
change the source code. But as these products have gained in
their users have been faced with a dilemma. For almost a year, Lindon,
Utah-based SCO Group has threatened to sue
using Linux
. The company currently has a $1 billion contract
filed against IBM , which was later increased to $3 billion in damage claims. IBM also planned to invest $50 million in Novell as part of the SUSE acquisition.

Since September, the only major vendor to offer indemnification from
legal threats against its version of Linux was Hewlett-Packard .

“This is an important next step in the industry’s move to make Linux
from litigation for end customers,” HP vice president of Linux Martin
said in a statement. “We are pleased to see and are in favor of
effort to extend protection and peace of mind to its customer base.”

The news comes less than 24-hours after the Open Source Development Labs (OSDL)
established a $3 million account to defray the court costs incurred
Linus Torvalds, Linux kernel creator and OSDL Fellow, and other OSDL
employees who were subpoenaed by the SCO Group as part of the dispute.

Novell is in a unique situation, however, in that it has a
ownership chain of UNIX and UnixWare. Despite SCO’s
, Novell said it has
to authorize its customers to use that UNIX technology in
internal business operations. Novell also said it has the right to take action
behalf of SCO under legacy UNIX SVRX licenses pursuant to the Asset
Agreement between SCO and Novell.

SCO officials dismissed Novell’s stance saying indemnification programs or legal defense funds won’t change their legal pursuits.

“We believe Novell’s indemnification announcement is significant for a couple of reasons,” SCO Group president and CEO Darl McBride said in a statement. By announcing the program they are acknowledging the problems with Linux. Through the restrictions and the limitations on the program, they are showing their unwillingness to bet very much on their position.”

A company spokesperson told this week that SCO will move forward with legal
action against companies it feels have violated SCO’s copyrighted
The company has yet to file suit against a single end-user but did send
demanding companies pay a $700-per-server licensing fee or
litigation. SCO is expected to announce its first batch of user
lawsuits by
Feb. 17.

As for the SUSE acquisition, Novell said it will continue the SUSE
brand. The deal opens the door for completion of the $50 million
of IBM in Novell announced Nov. 4.

Under the transaction, SUSE Linux now becomes a product business
within Novell with its sales and marketing handled by Novell’s existing
geographic business units and SUSE Linux’s current sales and marketing
staff. SUSE also retains its structure within Novell, like that of
open-source company Ximian in August 2003. The company said it would
SUSE to promote Linux adoption and Novell’s product lines.

Richard Seibt, the former CEO of SUSE LINUX is expected to stay on
Novell and continue to manage SUSE LINUX as President. The company said
engineers will work closely with Novell’s product teams as part of the
transition process.

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