IBM responds to SCO Unix lawsuit

Is that the sound of troops being mobilised?
Written by Stephen Shankland, Contributor

Is that the sound of troops being mobilised?

IBM began hitting back Friday against a SCO Group lawsuit that charges Big Blue with misappropriating Unix trade secrets and using them in Linux. "We got a copy of the complaint this morning. Based on what we've seen of it, it's full of allegations with no supporting facts," said Mike Fay, vice president of communications for IBM's systems group. Though Fay didn't comment on the specifics of the suit, the tone of IBM's statement indicates the computing giant won't knuckle under quickly to SCO's lawsuit and associated demands. "I would bet that IBM isn't going to take this sitting down," said Brian Ferguson, an intellectual property attorney at McDermott Will & Emery. "I would expect they will bring out the A-team of lawyers and aggressively defend themselves against this and potentially assert their own intellectual property." SCO filed a suit Thursday seeking more than $1bn in damages from IBM for allegedly using Unix intellectual property to improve Linux in violation of IBM's licence agreement with SCO. The suit alleges that IBM misappropriated SCO trade secrets, interfered with business, breached its contract with SCO and competed unfairly. The suit could affect SCO's relationship with Linux seller SuSE, whose version of Linux is the foundation of the UnitedLinux products SCO uses. "We at SuSE were greatly disappointed to learn of the SCO Group's recent actions... While we strongly believe that this does not impact Linux, we are concerned that these actions are not in the best interest of customers, partners and the Linux community," SuSE CEO Richard Seibt said. "Accordingly, we are currently re-evaluating our relationship with the SCO Group." SCO's stock leapt on Friday, closing up 89 cents, or 40 per cent, to $3.10 on the news. IBM's rose 83 cents, or 1 per cent, to $77.90. Bruce Perens, an open source advocate, said the increase in SCO's stock price illustrates his belief that the company's suit is a ploy to make SCO look more enticing to would-be acquirers, potentially including IBM itself. "I really strongly feel this suit is not meant to go anywhere in court. It's really just a prelude for an acquisition," Perens said. For its suit, SCO hired attorney David Boies of Boies Schiller and Flexner, who prosecuted the US Justice Department's anti-trust case against Microsoft and represented Al Gore in the vote-counting controversy in the presidential election. Legal observers and analysts said SCO likely will have an uphill struggle with its lawsuit and that the implications aren't good for the rest of SCO's business selling Unix and Linux products. "These are difficult claims to win on... Trade secret theft is extremely difficult to prove in court," Ferguson said. "When you have a copyright or trade secret claim, you have to show access of original, copyrighted material. [SCO] will have to show IBM engineers working on the Linux side had that kind of access and used that access to develop the Linux side of IBM's development." SCO's likely strategy is to "start up at the top and take out the biggest defendant out there - IBM in this case - hope it gets a quick settlement, and use that money to get a settlement with smaller companies down the line," Ferguson said. Secondary effects of the suit likely won't help SCO's other business, said George Weiss, research director at Gartner. SCO is likely to damage its relations with its network of sales partners that customise its software and build it into computers used by 'replicated sites' - companies such as McDonald's that have numerous similar branches. "There's a fear that SCO is using this as a means of either selling the company or desperately attempting to find some other business model as an alternative to their current software business," Weiss said. "I would advise SCO [Unix] users that they should have a contingency plan or migration plan to an alternate platform." In a brief news conference Friday, SCO Chief Executive Darl McBride denied the company is going down the path of Intergraph, which once made workstations but now specialises in software. In 2002, Intergraph's income from operations was $10m but its net income including legal settlements was $378m. "Are we turning into an Intergraph, where that is the only thing we're going to do? No, that is not the path we're going down," McBride said. Specifically, the company's 'SCO X' strategy, which will bear its first fruit this summer, "is really about taking our core operating system technologies and moving them forward", he said. SCO, formerly Caldera International and Caldera Systems, is the inheritor of the Unix intellectual property that first was created at AT&T. Linux, which works in many ways identically to Unix, is created by a group of open source programmers with assistance from Hewlett-Packard, IBM, Intel, NEC and Oracle and other companies. Red Hat, SuSE, SCO and others sell versions of Linux. The foundation of SCO's Linux is SuSE's product. SCO in January announced SCOsource, its strategy to seek licensing revenue more aggressively from Unix intellectual property the company owns. And the plan is moving quickly, beginning with a mechanism by which companies may license supporting Unix software 'libraries' that let programs written for SCO Unix run on computers that actually use the Linux operating system. Stephen Shankland writes for CNET News.com.
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