SCO claims IBM Unix contract void
By Stephen Shankland
Staff Writer, CNET News.com
June 16, 2003, 5:02 PM PT
update SCO Group on Monday said it revoked IBM's license to sell its version of Unix,
called AIX, and requested that a judge permanently block IBM's Unix business.
"We have terminated IBM's right to use AIX in their business, development,
distribution and sales," said Chris Sontag, head of the SCOsource effort to derive
more revenue from the company's Unix intellectual property. And in an amendment to the
company's March complaint against IBM, SCO is "seeking a permanent injunction
from IBM's continued use of our software in their business."
Also in the amended suit, SCO said that it owns the copyrights to Unix and criticized the
practices of Linux founder and leader Linus Torvalds. "A significant flaw of Linux is
the inability and/or unwillingness of the Linux process manager, Linus Torvalds, to
identify the intellectual-property origins of contributed source code that comes in from
those many different software developers" who contribute to Linux, the suit said.
IBM maintains that it has done nothing wrong, that its license to sell Unix products is
still valid, and that its customers need not worry that they no longer have a license to
use AIX, said spokesman Mike Fay, vice president of communications for IBM's systems
group. "Our Unix license is irrevocable, perpetual and fully paid up. It can't be
terminated," Fay said.
SCO said that the termination of the AIX license means that all IBM Unix customers also
have no license to use the software. "This termination not only applies to new
business by IBM, but also existing copies of AIX that are installed at all customer sites.
All of it has to be destroyed," Sontag said.
Despite the harsh rhetoric, the fact that SCO is seeking a permanent rather than
preliminary injunction means that the issue won't be resolved soon and customers need
not worry, said Daniel Harris, an intellectual-property attorney with Clifford Chance.
"There isn't going to be any practical impact now," Harris said.
"Unless they seek a preliminary injunction, there's no (court) order impacting
IBM or IBM's customers."
IBM sold $3.6 billion worth of Unix servers last year. Among AIX's high-profile
customers are Lawrence Livermore National Laboratory, for fulfilling its guarantees about
the safety and reliability of U.S. nuclear weapons; Colgate-Palmolive, in order to run
much of its global accounting and inventory system; and the National Weather Service, for
forecasting hurricanes and other weather events.
"We have a recognition of the fact that it's not the end users that have caused
this problem, it's IBM's actions that have caused this problem. Our preference
would be for corrective action on the part of IBM," SCO's Sontag said. "If
we need to, we will enforce all our rights, even with IBM's end users."
In a statement, IBM said it will stand behind its products and customers, but raised an
intellectual-property issue that SCO so far has skirted: patents.
"IBM will continue to ship, support and develop AIX, which represents years of IBM
innovation, hundreds of millions of dollars of investment and many patents," IBM
"I think that's a clear signal," said Gray Cary, an attorney at Mark
Radcliffe, who said that a company's first response to an intellectual-property
infringement lawsuit is a countersuit based on that company's patents. "I think
that's code for 'stand by for the hurricane.' You're going to find a stack
of patents about 5-feet high that your product infringes that's going to run up the
cost of litigation.'"
A judge likely wouldn't grant SCO a preliminary injunction, said John Ferrell, an
intellectual-property attorney at Carr & Ferrell. "If they were to ask for
preliminary injunction, I can't imagine that it would be granted because the harm to
IBM would be so tremendous relative to the benefit of granting the injunction now, as
opposed to waiting to the end of the case," he said.
In addition, SCO would have to post a bond that would pay for the damage to IBM's
business if a preliminary injunction were granted and later found to be improper, Ferrell
said. "SCO would have to post that in cash."
As a result, SCO's move means that AIX customers might feel a reprieve, Harris said.
"If anything, I think the customers may breathe a sigh of relief that there isn't
going to be any hearing on a preliminary injunction that might impact them," Harris
said. Seeking a permanent injunction as part of a trial "is going to take
But David Moyer, an attorney with Wineberg, Simmonds & Narita, said not seeking a
preliminary injunction "could signal weakness" on SCO's part. "They had
signaled they would do something to stop IBM from going forward with AIX. The fact that
they haven't filed a motion yet either signals they don't want to do something
that drastic or they don't believe they would win."
Sontag didn't explain SCO's reasons for not seeking a preliminary injunction,
other than to say the company is confident of its case and decided against "taking
Because of IBM's unwillingness to bow to SCO's demands, SCO's actions Monday
were expected. The companies had engaged in brief but unfruitful discussions, SCO said
The seeds of SCO's dispute were sowed several years ago. Unix and AIX has a long and
twisted history. In 1995, Novell sold SCO Unix copyrights and contracts with many large
companies, including Hewlett-Packard, IBM and Compaq Computer. Though those licenses lay
largely dormant for years, SCO decided that they could be a source of revenue that could
bolster the struggling company's fortunes after its failure to make a business of
SCO in March sued IBM for more than $1 billion, alleging that Big Blue had violated its
contract with SCO by misappropriating Unix trade secrets it had built into Linux. SCO then
found Unix code that it says was copied directly into Linux and has said it will sue
others as well.
IBM licensed Unix from AT&T in the 1980s, and SCO--formerly called Caldera Systems and
Caldera International--bought that contract in 2001. IBM was permitted to build on that
Unix technology, but SCO argues that IBM violated its contract by transferring some of
those modifications to Linux.
Specifically, Sontag said IBM moved technology to Linux from AIX and another version of
Unix called Dynix that IBM acquired when it bought Sequent.
Specifically, the transferred code includes the Journaled File System (JFS), extensions to
make Linux work on a multiprocessor server employing the non-uniform memory access (NUMA)
technique, Sontag said. In addition, he said read-copy update (RCU) for relieving some
memory bottlenecks on multiprocessor servers, was transferred.