IBM Counter Sues SCO Group Over Linux

IBM fought back against SCO Group in the high-stakes battle over Linux, filing a lawsuit late Wednesday in a Utah court claiming that SCO’s case breaches contract with IBM, infringes on its patents and signifies unfair competition, among other things.

IBM also said SCO’s suit is invalid because Linux is covered in the General
Public License (GPL) open source license and cannot be proprietary. IBM
argued that because it has contributed code under the GPL, which it said SCO
uses freely, SCO has no basis for which to sue.

The Armonk, N.Y. company said it is “seeking compensatory and punitive
damages and an injunction requiring SCO to refrain from misrepresenting its

The counterclaims are IBM’s answer to SCO, which embarked on what has
snowballed into a $3 billion lawsuit in March for allegedly putting Unix
code into the Linux operating system. SCO also claimed IBM did not hold to
its Unix license with the Linux group.

In an internal memo obtained by targeted for IBM’s
sales force, Bob Samson, vice president of systems sales in IBM’s Systems Group,
discussed his company’s thrust behind the SCO suit.

“We see no merit in their claims and no supporting facts,” Samson said.
“Significantly, IBM counter sued SCO on a range of issues. Simply put, SCO’s
scheme is an attempt to profit from its limited rights to a very old UNIX
operating system by introducing fear, uncertainty and doubt into the

“We continue to vigorously defend ourselves,” Samson continued. “And, we see
similar resolve across the industry with regard to Linux, just as it has
supported important, sometimes disruptive, efforts like TCP-IP and the
Internet. Make no mistake, SCO will continue to look for ways to create
fear, uncertainty and doubt. FUD, not facts, remains the focus of SCO’s

SCO responded Thursday, saying that IBM filed a counterclaim to derail attention from its “flawed Linux business model,’ and repeats the same allegations made in Red Hat’s filing.

“In a strange alliance, IBM and the Free Software Foundation have lined up on the same side of this argument in support of the GPL,” the company said in a statement. “IBM urges its customers to use non-warranted, unprotected software. This software violates SCO’s intellectual property rights in UNIX, and fails to give comfort to customers going forward in use of Linux. If IBM wants customers to accept the GPL risk, it should indemnify them against that risk. The continuing refusal to provide customer indemnification is IBM’s truest measure of belief in its recently filed claims.”

IBM’s claim that SCO violated the GPL is the sixth of 10 counterclaims, the
last four of which address patent infringement by SCO with regard to IBM’s
Linux products.

In the first counterclaim, IBM alleged that SCO breached contract with the
“Amendment X,” a modification of the original Unix contract IBM signed with
AT&T in 1985. Amendment X grants IBM “irrevocable” and “perpetual” rights to
Unix. By filing a suit, IBM’s 45-page suit says, SCO has failed to honor the
amendment made in 1996.

As Red Hat did earlier in the week, IBM said SCO violated the Lanham Act, a
law designed to help companies defend against allegations that may harm its
business. IBM said SCO has made false claims regarding IBM’s AIX and
Linux-related products and services, “which affect a customer’s decision
whether to purchase these products or services.”

Related to that, IBM is arguing that SCO engaged in unfair competition by
seeking to deprive IBM of the use and sale of its Linux products and
services to benefit its own Unix licensing business. In a separate
counterclaim, IBM said SCO’s legal actions have marred its business
relationships with other companies.

The patent infringement claims are widespread and concern SCO’s main clustering software
products, including UnixWare, Open Server, SCO Manager and Reliant HA. IBM
said SCO infringed on some of its patents for data compression, menu
navigation, a receipt system for electronically shipped documents and for
monitoring subsystems in a computing cluster.

Some analysts, such as Sageza Group’s Charles King, took a stab as to why IBM waited so long to respond to SCO’s legal dirge.

“a look at the issues contained in the company’s countersuit suggests that IBM was simply waiting for SCO to fashion enough rope for a public hanging before moving carefully and methodically ahead,” King said in a research note. “The suit proceeds along lines both predictable and unique. First, it echoes an issue that many in the Linux community have pointed to. Since until recently SCO was an active and eager Open Source participant, accepting and distributing Linux contributions, its claims against other Open Source distributions is contradictory and violates the GNU General Public License. Second, SCO’s claims that it has the power to revoke IBM’s license to AIX, which lay at the heart of the company’s original suit, are essentially fallacious and contradicted by agreements between IBM and the original UNIX license holder, Novell.

SCO hasn’t stopped with large enterprises. The outfit
has claimed that because Unix code was inserted into Linux code it is
seeking recompense from those who use Linux.

SCO also said it wants $32 for each embedded system using Linux
versions 2.4 and above because, it claims, those systems contain code that
infringes on its Unix software.

Meanwhile, major enterprise Linux software provider Red Hat launched its own
attack against SCO Monday, asking a Delaware court for a permanent
injunction holding SCO accountable for a Lanham Act violation.

Simply, Red Hat feels the way SCO is coloring the allegations in the suit is
hurting its business. Red Hat also aims to prove that its technology and
products do not infringe SCO’s intellectual property.

SCO answered those claims by saying it would likely file counterclaims
against Red Hat for copyright infringement and conspiracy.

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