FEDERAL Government departments are expected to be exempt from exposure to the SCO Group's claims over Linux.

The Copyright Act allows the Commonwealth to assume intellectual property rights and negotiate payment later.

But no such preferential treatment exists for government contractors and suppliers, which must carry the legal burden under present federal contracts if they supply software found to infringe a third party's intellectual property.

It is not clear how the Commonwealth's special treatment under the Copyright Act will be applied should SCO's claims on Linux be upheld in US courts.

Software suppliers' contracts with federal agencies such as Centrelink and the Australian Tax Office contain strict clauses indemnifying the agencies against any "claim, suit, demand, action or proceeding" from any third party claiming intellectual property.

If legal action is taken against a Commonwealth department or agency through a dispute on third party software, the agency reserves the right to withdraw, leaving the legal battle — including all costs incurred and all penalties applied — to the contractor.

The agencies are leaving nothing to chance, carefully watching the SCO litigation against IBM in the US over ownership of key parts of Linux.

Centrelink, one of the government's most active open source users, said last week it had not received any letter of claim from SCO over its use of Linux, but it had sought legal advice.

Centrelink IT architecture services national manager Peter Gunning said the agency had watched the SCO-IBM legal battle closely, and had consulted its own contract lawyers, and the Attorney-General's department.

Mr Gunning said Centrelink had "taken preliminary advice on how we should respond if any correspondence is received".

"We'll have to wait and see how the litigation unfolds.

"There is a provision within the Copyright Act that allows us to assume the intellectual property rights and then negotiate a fair and reasonable payment for those rights later," he said.

The Tax Office, which recently announced an open source policy to take advantage of platforms such as Linux, said yesterday it had also kept a close eye on SCO's claims. A spokeswoman said the ATO had some Linux licences, and was reviewing its legal exposure to SCO claims but had not sought legal advice.

Copyright Act provisions that allow the Commonwealth to assume IP rights are in addition to standard Commonwealth contract provisions in which suppliers must accept liability and provide warranty to the agency in third-party litigation over IP.

SCO launched its legal assault on Linux in March last year with a lawsuit filed against IBM seeking $US1 billion ($1.3 billion) in damages.

The suit, which was later raised to $US3 billion, claims IBM has made unauthorised use of SCO's Unix SvR5 in its Linux development efforts.

The dispute stems from the mid-1990s, when SCO and IBM combined forces in a Unix development called Project Monterrey to create a "unified Unix" operating system.

Monterrey was based largely on SCO's Unix SvR5.

As well as pursuing damages from IBM, SCO is sending letters of demand to Linux users informing them they they are in breach of SCO copyright, and offering them the opportunity to sign a licensing agreement.

Australian IT

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