HP indemnifies Linux users

FRAMINGHAM (09/24/2003) - Hewlett-Packard Co. on Wednesday became the first major systems vendor to offer protection for its Linux customers against possible legal action by The SCO Group Inc., saying that it would take over legal defense and any liability on its customers' behalf should lawsuits be filed.

"We're telling the market that we're willing to step up to the plate and protect our customers. Where are our competitors that they're not willing to protect their customers?" Martin Fink, vice president of Linux at HP, said during a conference call announcing HP's plan to offer indemnification.

According to Fink, all customers who purchase a Linux distribution from HP, run it on HP hardware and obtain a standard support contract with HP will be indemnified. In order to maintain that indemnification, customers cannot make changes to the Linux source code, Fink says.

Customers who purchase Linux on HP hardware after Oct. 1 are automatically indemnified, although current customers can also receive indemnification on a case-by-case basis, Fink says.

"We're giving the green light for customers to move forward on their Linux deployments," he says.

Analysts called the move a smart marketing ploy and said that it could give HP, which already leads the Linux server market, an advantage. Dell and IBM have both said they do not plan to offer their Linux customers indemnification.

"Certainly, if I were an end user, and I had any worries about (SCO), and I'm going to buy Intel hardware anyway, then I would probably be thinking HP," says Bill Claybrook, an analyst with the Aberdeen Group. "It makes you feel better knowing that you don't have to worry about it."

Not that customers seem too concerned about SCO's legal efforts, which began last March with a US$1 billion copyright infringement lawsuit filed against IBM Corp. Since then, SCO has widened its line of attack to include Linux distributors and customers, claiming that its intellectual property has been misappropriated into the open source operating system.

In July, SCO began selling licenses to Linux customers to protect them against legal threats. SCO claims that at least one Fortune 500 company has purchased a SCO Intellectual Property License for Linux. Earlier this month, SCO said that it planned to issue invoices to customers that did not opt to buy licenses on their own.

"In general we have not found that customers are particularly worried about the long-term viability of Linux or have concerns with potential lawsuits," says Fink. "Even still, HP developed this indemnification to address any enterprise concerns and mitigate their risk for choosing Linux."

He says HP considered legal action, such as a countersuit against SCO - both IBM and Red Hat have filed such countersuits - but determined that customer indemnification was the best route.

"That is a risk that is acceptable to HP," Fink says.

Nevertheless, SCO saw the move as a boost to its ongoing battle to protect its intellectual property.

"HP's actions ... reaffirm the fact that enterprise end users running Linux are exposed to legal risks," SCO said in a statement. "Rather than deny the existence of substantial structural problems with Linux as many Open Source leaders have done, HP is acknowledging that issues exist and is attempting to be responsive to its customers' request for relief."

Fink says HP has not entered into any licensing agreements with SCO and is not taking any stand on SCO's legal efforts.

"Our position is we just want to remove the legal cloud. Whether or not SCO has a point is for the courts to decide," he says.

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