The Honorable _____
____ Cannon HOB
Washington, DC 20515
Dear Honorable _______________:

I am writing to draw your attention to an important controversy that has become one of the dominant issues in the software industry.

The way in which this issue is resolved will have very important ramifications for

• our nation's economy
• our continued ability to lead the world in technology
• our international competitive position in the global software industry, and even for
• our national security

The source of this controversy is the rapid spread of a form of software called "Open Source software." The most widely used Open Source product is a software environment called Linux. Open Source Linux software is developed and enhanced by a loose, worldwide group of volunteers usually called "the Open Source community." Through the work of this community of volunteers, lately abetted by the efforts of several major computing companies, Linux software has become a popular way to run computer server systems, Web sites, networks and many applications.

Innovation in software in itself is not a problem -- the new computing technologies have long been an engine of growth for our nation. But there are two serious problems associated with the spread of Linux and the Open Source approach to software development and distribution.

First, Linux and Open Source software are developed and distributed (often at no cost) under a scheme called the GNU General Public License (GPL) which, some believe, is in direct contradiction to U.S. Copyright law, to the Digital Millennium Copyright Act (DMCA), and to the recent Supreme Court decision in Eldred v. Ashcroft. I have attached a document that describes in detail the problems of the GPL and the ways in which it violates current U.S. statutes.

Those who designed the GPL readily admit that they created this license to have the effect of "freeing" software -- taking it out of the realm of copyright protection by placing it in the public domain. The author of the GPL is well-known for his view that proprietary software (meaning software as an intellectual asset from which the designer can derive profit) is unacceptable.

The GPL seeks to commoditize software by reducing its monetary value to zero and making it freely available to anyone. The GPL is carefully designed to have a viral effect -- it "frees" the software that is proprietary, licenseable, and a source of income from the companies that developed it. Until now it has been generally agreed that the GPL has never faced a legal test. SCO is involved in a major software intellectual property case through which the GPL will face such a test.

The second problem with Open Source software is that it is not all original. Linux software contains significant UNIX software code that has been inappropriately, and without authorization, placed in Linux. I know this because my company, the SCO Group, owns the rights to that UNIX code originally developed by AT&T. SCO holds licenses to this valuable asset with more than 6,000 companies, universities, government agencies and other organizations. But as the use of Linux has grown, license revenue from UNIX has shrunk.

Why wouldn't it? Why would someone license UNIX code from SCO and other legitimate providers when they can get much of that same code, for free, in Linux? The damage this has inflicted on SCO's UNIX business is an example of what could happen to the entire software industry if the current Open Source model continues. For this reason, SCO has taken legal action against those who, we believe, have misappropriated our most important corporate asset. By taking action, our company has become a target for sometimes vicious attacks -- including online attacks that have repeatedly shut down our company Web site. Despite this, we are determined to see those legal cases through to the end because we are firm in our belief that the unchecked spread of Open Source software, under the GPL, is a much more serious threat to our capitalist system than U.S. corporations realize. I believe that this threat is manifest in these important areas:

1. The threat to the U.S. information technology industry. Our economic recovery appears to be well underway, but it is still fragile and could be thrown off track. Just as technology and innovation have led the U.S. economy during previous boom periods, many assume that this will happen again. But imagine a major new technology buying cycle in which revenue from software sales shrinks. Free or low-cost Open Source software, full of proprietary code, is grabbing an increasing portion of the software market. Each Open Source installation displaces or pre-empts a sale of proprietary, licensable and copyright-protected software. This means fewer jobs, less software revenue and reduced incentives for software companies to innovate. Why should a software company invest to develop exciting new capabilites when their software could end up "freed" as part of Linux under the GPL?

Economic damage to the U.S. software industry could have serious repercussions if this continues unchecked. International Data Corporation forecasts that the global software industry will grow to $289 billion by 2007. Beyond the economic stimulus provided by the software industry, U.S. sales taxes on that amount of software will be somewhere between $17 billion to $21 billion. Our economy has already been hurt by offshore outsourcing of technology jobs. I'm sure you've seen this among your constituents. What if our technology jobs continue to move offshore at the same time the economic value of innovative software declines? For more than 20 years, software has been one of the leading examples of innovation and value-creation in our economy. When software becomes a commodity with nearly zero economic value, how will our economy make up for this loss?

2. The threat to our international competitive position. In a growing number of countries, including Britain, Germany, France, Israel, Brazil, Japan, South Korea, China and Russian,[sic] national and municipal governments are requiring that government entities use Open Source software. Instead of UNIX from any number of U.S. companies or Windows from Microsoft, governments throughout Europe and Asia are using Linux, often downloaded for free from the Internet. I find this particularly galling because that Linux software contains thousands of lines of my company's proprietary UNIX code -- for which we receive no revenue. SCO has a strong, involuntary presence in certain non-U.S. government markets -- but this is only through unauthorized use of our code in Linux software.

U.S. software companies are already finding it difficult to compete with highly capable Open Source software that has gained many of its capabilities through the illegal incorporation of code "borrowed" from the rightful owners. We need to look no further than the declining revenues of the music publishing industry -- undermined by free, online downloading -- to see a warning of what could be next for our software industry.

Through the years, Congress has repeatedly dealt with the tough issues of predatory pricing and "dumping". I contend that the ultimate predatory price is "free". There is no more damaging example of dumping than the widespread availability of highly capable software that devalues intellectual property by making it available at no cost -- in direct competition with the products from which it is derived.

3. The threat to our national security. I assert that Open Source software -- available widely through the Internet -- has the potential to provide our nation's enemies or potential enemies with computing capabilities that are restricted by U.S. law. SCO's UNIX software is subject to export licensing restrictions, and for good reason. With the powerful multi-processing features of UNIX software, someone could build a supercomputer for military applications. My company must adhere to these restrictions: we cannot sell to North Korea, Libya, Iran, Sudan and several other nations. But a computer expert in North Korea who has a number of personal computers and an Internet connection can download the latest version of Linux, complete with multi-processing capabilities misappropriated from UNIX, and, in short order, build a virtual supercomputer.

When I talk about this, some people think I'm an alarmist. I have a different view -- I think that this may have already happened. Open Source software and the GPL, unchecked, are an easy way for our adversaries to circumvent our software export restrictions. I'm bringing these troubling issues to your attention to ask you to consider them whenever you are discussing or voting on issues of the economy, intellectual property and national security. The Open Source community now includes several major corporations. These companies have been lobbying for increased government support of Open Source software. Some want government RFPs to specify Open Source software. I urge you to consider the other side because I believe that Open Source, as it is currently constituted, is a slippery slope. It undermines our basic system of intellectual property rights, and it destroys the economic reasons for innovation.

As part of the effort to protect our intellectual property rights, The SCO Group has met with several U.S. government agencies. We have been encouraged to see that, unique among the organizations with which we've met, most government agencies understand the implications of SCO's case. Government agency leaders readily understand the value of copyrights, and they do not want to be in violation. This is in contrast to many corporations, who seem to have a "don't ask, don't tell" policy when it comes to understanding the source of the software they are using.

Our nation's economic system is reflected in the concept and practice of Copyright. In 1980 and again in 1998, Congress took action to solidify the rule of copyright in the software industry. The GPL (which its authors call "copyleft" to emphasize that it is the opposite of copyright) should not be allowed to continue to undermine the foundation of one of our most important industries. I ask that you consider this very carefully in your role as one of our nation's leaders.

Sincerely,
Darl McBride
President and CEO
The SCO Group, Inc.