IANAL, but my understanding is that the licensing of the code that William 
wrote for the servers that run SMC would only be relevant if the code is 
distributed.

That is, the license of a software is an agreement that happens in the 
moment of the distribution. The license stablishes the conditions for both 
the distributer and the receiver of the copy. If there is no distribution 
(that is, if the software is only used by its creator), it makes no sense 
to talk about the license. In fact, if the problem is that the GPL demands 
that the code that links against it is GPL, William could state that his 
code is also GPL; just he would not distribute it to anybody. That does not 
violate the GPL. GPL does not force you to distribute the code, just forces 
you to distribute it in source form IF you distribute it in binary form.

On the other hand, ii recall William saying that keeping the high 
availability code of SMC for his own was a condition that UW imposed for 
funding it.

If some day William, or the UW decides to license his code to somebody, we 
can talk about the legality of the license chosen, depending on how it 
links to GPL code. But as long as that licensing does not happen, i see no 
violation of GPL at all, neither in the letter nor in the spirit.

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