SCO Gives SGI Notice of IRIX Termination

SCO Group , already embroiled in a legal struggle with
IBM over allegations that Big Blue breached its Unix
contract with SCO by releasing portions of its AIX operating system to the
open source community, appears to have now set its sights on Silicon
Graphics Inc. for much the same reason.

In SGI’s annual 10-K filing with the U.S. Securities and Exchange
Commission, the company revealed that SCO had sent notice that it plans to
terminate SGI’s Unix license for IRIX, much as it did with IBM over

A number of industry watchers have pointed to the possibility that SGI
would be a target for SCO, especially after SCO pointed to SGI’s XFS
journaling file system as one of the key Unix technologies that it claims
was improperly submitted to the open source community.

“We recently received a notice from SCO Group stating its intention to
terminate our fully paid license to certain Unix-related code, under which
we distribute our IRIX operating system, on the basis that we have breached
the terms of such license,” the company said in its filing. “We believe
that the SCO Group’s allegations are without merit and that our fully paid
license is nonterminable. Nonetheless, there can be no assurance that this
dispute with SCO Group will not escalate into litigation, which could have
a material adverse effect on SGI, or that SCO Group’s intellectual property
claims will not impair the market acceptance of the Linux operating

While SGI developed the XFS technology, SCO maintains that it has rights
over derivative works created based on its Unix intellectual property.

“There have been violations of their contract through contributions by SGI
to Linux of Unix System V derivative code,” SCO spokesman Blake Stowell
told Stowell said the contributions include both
derivative code and line-by-line Unix System V code.

He added that the letter was sent to SGI in August giving them 60 days to
remedy the situation.

An SGI spokesperson told that SGI responded to the
letter by asking for more details, “since the letter is very vague about
what they mean by a breach, we need more information from them so we
understand what they’re talking about.”

However, the spokesperson said that SGI does not believe it has breached
its contract, nor does it believe SCO has the power to terminate its Unix

“Our license is fully paid and it is unterminable,” she said. “We don’t
believe that they can terminate the license and we don’t believe that we
are in breach of contract, but we have yet to receive specific

Stowell said SCO, at this time, has no plans to sue SGI.

Meanwhile, SCO’s multi-billi
on dollar suit
against IBM is proceeding. On Sept. 25, IBM filed an
amended countersuit in the United States District Court for the District of
Utah, citing breach of contract, violation of the Lanham Act, unfair
competition, intentional interference with prospective economic relations,
unfair and deceptive trade practices, breach of the GNU General Public
License (GPL), promissory estoppel, copyright infringement, and four
charges of patent infringement.

“These counterclaims arise from SCO’s efforts wrongly to assert proprietary
rights over important, widely-used technology and to impede the use of that
technology by the open source community,” IBM said in its countersuit. “SCO
has misused, and is misusing, its purported rights to the Unix operating
system developed originally by Bell Laboratories, then a research arm of
AT&T Corp., to threaten destruction of competing operating systems known as
AIX, Dynix and Linux, and to extract windfall profits for its unjust

Additionally, IBM claimed that SCO has infringed a number of IBM copyrights
and patents. On the copyright front, IBM said SCO took copyrighted source
code made available by IBM under the GPL, included that code in its Linux
products, “and copied, modified, sublicensed and/or distributed those
products other than as permitted under the GPL.”

As for patents, IBM claimed SCO has infringed four of its patents by
“making, using, selling and/or offering to sell a variety of products,
including but not limited to: ‘UnixWare,’ a Unix operating system for Intel
and AMD processor-based computer systems; ‘Open Server,’ an operating
system platform; ‘SCO Manager,’ a Web-based remote systems management
solution for management of Linux and SCO Unix systems; and “Reliant HA,’
‘clustering’ software that permits interconnection of multiple servers to
achieve redundancy.”

For its part, SCO scorned IBM’s assertions about the GPL.

“In this amended complaint IBM asserts that SCO has violated the GNU
General Public License (GPL), and based on this violation has then violated
certain IBM copyrights,” SCO said in a statement Monday. “IBM, not SCO, has
brought the GPL into the legal controversy between the two companies. SCO
believes that the GPL — created by the Free Software Foundation to
supplant current U.S. copyright laws — is a shaky foundation on which to
build a legal case. By contrast, SCO continues to base its legal claims on
well-settled United States contract laws and United States copyright laws.”

SCO also noted that the GPL has not faced a full legal test, and “SCO
believes that it will not stand up in court.”

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