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IP attorney: SCO's investors are safe, but IT patent offenders aren't

Attorney Thomas Carey ponders IBM's reasons for subpoenaing SCO's investors and spells out why software patent problems won't go away.

Why is it legal to give money to SCO's meritless legal battle or get software patents that hamstring innovation?

IT pros posed these and other questions after reading attorney Thomas Carey's explanation of why SCO has no case against Novell and SCO. In this follow-up interview, Carey ponders the fate of and IBM's reasons for subpoenaing SCO's investors and spells out why software patent problems won't go away. Carey chairs the Business Practice Group of Bromberg & Sunstein LLP, an intellectual property law practice in Boston, Mass. Carey's IT background includes a stint as a programmer for the city of New York.

Why is it legal for investors to give SCO money to pursue a meritless legal case?

Thomas Carey, attorney

Carey: I suppose that the investor could be subject to a counterclaim brought by the defendant. To pursue such a claim would be to swim upstream, however, because U.S. law makes it difficult to recover attorney's fees, which is the main form of damages caused by a frivolous lawsuit.

To recover against the investor, the defendant would have to show that the lawsuit is frivolous [a very hard standard to meet], and the investor know or should have known that the lawsuit was frivolous at the time the investment was made, [that's] another tough burden of proof.

If you're saying, 'There ought to be a law against such investing,' above and beyond the theories that I have explained; well, you may be right. Right now there is no law against funding weak lawsuits.

More on this topic

Why SCO has no case

Ask attorney Scott Nathan about patents, SCO

But before you advocate such a law, imagine how that law would apply if the tables were turned. Imagine, for example, the guy who invented the intermittent windshield wiper and sued the car companies for years before he could get his just reward (a true story). What if there had been a law making it possible for the auto makers to threaten anyone who provided the fellow with financial support? Is that the system you want?

Hasn't IBM issued numerous subpoenas to those involved in funding and supporting SCO's actions? Is this just a scare tactic?

Carey: I haven't read all the discovery requests; but the securities laws would require SCO to make full disclosure to its investors. IBM, at the very least, would want to know what weaknesses in the SCO claims were disclosed to the investors, so that IBM could exploit them in court. It is common to seek broad discovery. You never know what you are going to find.

Some readers disagree with your statement in the Q&A: "The key to the case is that IBM specifically negotiated with SCO a clause that permitted it to use the same programmers, who saw the Unix code, to make competing products…The result is, absent literal copying of meaningful amounts of Unix into Linux, SCO has no case."

They say that this fact may destroy SCO's trade secret case, but not its copyright infringement case. Copying may have occurred. If so, under copyright law, isn't it true that it does not need to be a direct, word-for-word copying to infringe?

Carey: I believe that the side letter that SCO signed constitutes a waiver of its right to pursue such a claim; or, if you prefer, a license permitting IBM to create derivative works. The language and the actions are simply too clear to obfuscate with layers of legal theories. SCO gave IBM express permission. No further analysis is needed.

Are SCO's attorneys duty-bound to continue the case through trial if SCO runs out of money to pay them?

Carey: They probably are, yes.

Some IT pros believe that SCO's case is far less important to the future of Linux and open source than the issue of wrongfully-given and wrongfully-used software patents. Do you agree or disagree?

Carey: I agree, except for the term 'wrongfully'. Patents have the potential to be far more disruptive to open source than SCO. Whether these patents are wrongfully given is a matter of opinion. Even Microsoft thinks that the patent office is too easy-going in issuing patents, so there are definitely some quality-control issues at play. But, I can't go so far as to say that patents -- even software patents -- are ipso facto 'wrongful'.

Regarding patents, could you discuss the implications of the U.S. Patent and Trademark Office's (PTO) approval of a pair of patents held by Microsoft related to its File Allocation Table system? In particular, doesn't this pose problems for open source developers?

Carey: Perhaps. But, it might be possible for the open source community to design around these patents. It is not clear to me why the open source community needs to have a FAT system just like Microsoft's. For what it's worth, these patents don't last forever. Microsoft's patent 5,758,352, for example, has about 10 more years to go before it becomes public domain technology.

The Blackberry patent ruling -- Blackberry maker Research In Motion vs. patent holding company NT -- really has open source developers and users worried about the patenting of ideas, not real inventions.

Carey: Isn't that what patents are for -- to reward people who come up with novel and useful ideas?

Is there a good way for product developers and vendors to protect themselves from such actions?

Carey: They can search the PTO website to look for patents that their planned products may infringe. Unfortunately, that won't necessarily tip them off to patent applications that have been filed but not yet published, and which can come back and bite them. So, the system is not perfectly fair.

Aren't users going out on a limb every time they invest in IT software or devices, because the future financial health -- and, thus, the ability to provide support -- of makers of those devices could be compromised by patent disputes?

Carey: Users are not taking anywhere near the risk that the companies who make the products are taking. And yes, it is a dangerous world out there. But we take bigger risks every time we get in our cars. It is always possible that a drunk will cross the center strip and hit us head on. But we drive anyway, because it is so darn convenient. Same thing for users of potentially infringing software, except that the likely consequences are much less dire.

Ultimately, the question is: Does the benefit to society that arises from advances in technology that are fostered by the patent system exceed the costs to society that arise because of the temporary monopolies that the patent system creates. If the answer is no, the solution is almost certainly not to scrap the patent system entirely. Recall that our founding fathers called for such a system in our Constitution. They knew something about what they were doing.

The solution may be to make some adjustments to the system. For example, the system could require immediate publication of patent applications; it could shorten the length of software patents; or it could eliminate the presumption in favor of injunctive relief that we now have. But the system itself is important to our progress.

Dig Deeper on Linux servers

Protecting yourself from infringement claims, part 1 @8774 When a customer buys a product -- from a can of soup to a car -- they can normally expect that the manufacturer of that product is going to protect them in the event that the product is defective, causes them a loss or injury, or even, in rarer cases, causes another manufacturer to sue them over its use. That protection, known in legalese as "indemnification," is a concept that is taken for granted in traditional sales, but until recently has been surprisingly absent from the sale of software, according to technology patent attorney Bruce Sunstein.

So, when software vendors offer to provide or sell indemnification for their products, is it deserved insurance or merely a marketing ploy? Should your enterprise worry about indemnification for open source software products? In the first part of this interview, Sunstein explains how indemnification works and how its use has evolved for software companies over time. Then, in Part 2 of this interview, he gives some more advice about patent insurance and how to best situate your company in the event of future legal questions.

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