This is the latest twist in the dispute between SCO Group and IBM. SCO Group is currently in litigation with IBM with a pending $3 billion lawsuit over SCO's claim that IBM stole code from SCO's UNIX operating system.
Who Owns What?
In this latest countersuit, IBM is going after SCO to defend patents that it owns, but which SCO has misappropriated in its UnixWare, Open Server, SCO Manager, and Reliant HA products.
IBM says these SCO Group products are using the following IBM patents: Data Compression Method, Method of Navigating Among Program Menus Using a Graphical Menu Tree, Self-Verifying Receipt and Acceptance System for Electronically Delivered Data Objects, and Method for Monitoring and Recovery of Subsystems in a Distributed/Clustered System. IBM wants SCO Group enjoined from selling or further developing the products in which it claims SCO is using these patented techniques.
In addition, the IBM suit also charges that SCO is violating the General Public License (GPL) that regulates how the Linux operating system can be used. "These counterclaims arise from SCO's efforts to wrongly assert proprietary rights over important, widely used technology and to impede the use of that technology by the open-source community," IBM's complaint reads. "SCO has misused, and is misusing, its purported rights to the UNIX operating system developed initially by Bell Laboratories, then a research and development arm of AT&T Corp., to threaten destruction of the competing operating systems known as AIX and Linux, and to extract windfall profits for its unjust enrichment."
IBM: "SCO Is Lying!"
IBM's complaint also claims that SCO has lied when it has told customers that it has the right to revoke IBM's UNIX license, under which IBM had developed its own AIX version of UNIX. Last June, SCO announced that it had terminated IBM's UNIX license and that it would go after IBM's AIX business. But, according to IBM's lawsuit, SCO's purchase of UNIX from Novell in 1995 never included any right to revoke IBM's license. According to IBM, its original license of UNIX from AT&T Bell Labs was "perpetual and irrevocable." IBM attached letters from Novell (who purchased UNIX from AT&T) to support these assertions.
Clearly, IBM's countersuit is designed to bolster the morale of its AIX users while laying the groundwork for the defense against SCO's original $3 billion lawsuit. IBM is pulling no punches, dragging out its substantial array of arcane intellectual property patents to send SCO's lawyers and paralegals back to their research libraries.
But what is not clear in this latest foray is how the dispute surrounding the Linux operating system will ultimately play out in the courts or how customers will protect themselves from getting dragged in with the legal undertow.
Who Owes What?
On August 11, 2003, SCO announced that a first Fortune 500 company has agreed to pay SCO Group the $699 per-processor license fee for using the disputed Linux code. According to SCO, this unnamed company would rather pay SCO protection money than be dragged into the legal surf. SCO has devised this licensing arrangement--telling Linux customers they must buy a version of SCO UNIX--to make Linux customers feel secure that they will be immune from subsequent SCO lawsuits.
"We've had more than 300 companies in the first four business days of this program contact SCO to inquire about SCO's Intellectual Property License for Linux," said Chris Sontag, senior vice president and general manager of SCO's SCOsource software licensing division. "This Fortune 500 company recognizes the importance of paying for SCO's intellectual property that is found in Linux and can now run Linux in their environment under a legitimate license from SCO. We anticipate this being the first of many licensees that will properly compensate SCO for our intellectual property."
Who Cares?
Meanwhile, Red Hat has also joined the food fight, with its own suit against SCO, asking the courts to ban SCO from bullying Linux customers.
And, if Red Hat's and IBM's lawsuits are successful, some legal analysts wonder if the companies that pay the SCO licensing fee could in fact be liable themselves, for violating the terms of the Linux GPL. Why? The Linux GPL clearly states that purchases of the Linux operating system must allow the distribution of the complete source code without charge or obstruction. But SCO's licensing arrangement intrinsically claims that SCO is selling its UNIX license so that the customer will not be liable for following the rules of the GPL. This "value-add" licensing scheme is, in the words of some analysts, extortion.
This battle over Linux is possibly the worst scenario possible for customers who use Linux in their businesses, and many have concluded that their companies must wait out the legal battles before continuing with implementation plans.
This is the nub of the technical/strategic quandary facing all members of the Linux community. On the one hand, Linux is offering an enterprise-level solution to the serious tasks of business computing at an exceptionally low price. On the other, the continued legal wrangling of SCO Group has begun to drive a wedge in the Linux community, pitting those who support the unfettered growth of Linux's open-source distribution against those who cannot afford the legal ramifications.
Follow the Money Trail
Meanwhile, with each new round of lawsuits, SCO Group's stock value rises on the stock exchange, making it one of the hottest tech stocks currently on the board. And some analysts believe that this tactic--suing IBM for publicity and stock exchange volatility--is the real goal of SCO Group's legal actions. After all, it's not the ownership of obscure patents or intellectual property that drove SCO to sue IBM, but the failing value of its stock that prompted SCO Group's CEO Darl McBride into action. As speculators buy shares on the stock market, SCO's management group can steadily sell off its own stock options, raking in potential millions with which it can purchase new companies and reposition its fortunes. Win or lose in the courts, SCO still comes out smelling like a rose.
Thomas M. Stockwell is Editor in Chief of MC Press. He may be reached for comment at
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