SCO Sues IBM Over Unix For $1 Billion

The SCO Group, formerly Caldera Systems, announced today that it has filed a lawsuit against IBM seeking $1 billion in damages for allegedly misappropriating its Unix software license.

In the lawsuit, filed in state court in Utah, SCO is claiming that IBM has misappropriated trade secrets and engaged in tortious interference, unfair competition and breach of contract with SCO. The complaint alleges that IBM has made concentrated efforts to improperly destroy the economic value of Unix, particularly Unix on Intel, to benefit IBM's budding Linux business. IBM was unavailable for comment.

"It is clear from our standpoint that we have an extremely compelling case against IBM," said Darl McBride, president and CEO of Lindon, Utah-based SCO, in a press statement today. "SCO has more than 30,000 contracts with Unix licensees, and upholding these contracts is as important today as the day they were signed."

In 1995 SCO purchased the rights and ownership of Unix, which was created and formerly licensed by AT&T Bell Laboratories, as well as UnixWare, which includes source code, source documentation, software development contracts, licenses and other intellectual property that pertained to Unix-related business. SCO claims IBM originally entered into its Unix license agreement with AT&T in February 1985 in order to produce the AIX operating system. The license agreement, according to the complaint, requires that the Unix software code be held in confidence, and prohibits unauthorized distribution or transfer. SCO officials, however, contend that IBM has been donating Unix code to the open-source community and violating its licensing agreement.

During a press conference today, McBride emphasized that SCO's legal action concerned Unix, not Linux; SCO and IBM have partnered on a number of occasions in the past to boost Linux. "This case is not about the Linux community or the UnitedLinux," McBride said. "This case is about IBM and their not stepping up to their contracts violations. When they take our source code and donate it to the open-source community, that's when we have a problem."

The software company is seeking "no less than $1 billion, together with additional damages through and after the time of trial" because of IBM's alleged unfair business practices. SCO is also demanding that IBM cease "anticompetitive practices" based on specific requirements sent in a notification letter to IBM. If these requirements are not met, SCO said it will revoke IBM's AIX license within 100 days.

McBride said SCO and IBM have been discussing this issue since last December, but were unable to reach an amicable agreement. SCO's letter and complaint have been filed by the law firm of Boies, Schiller and Flexner. SCO announced in January that the law firm had been retained to research and investigate possible violations of SCO's intellectual property. One of the firm's lead attorney, David Boies, was the lead attorney for the U.S. Department of Justice in the antitrust case against Microsoft.

SCO itself won a legal dispute with Microsoft in 2000 after charging the software giant with antitrust practices concerning Caldera's DR-DOS product. SCO has sought $1.6 billion and reported was awarded $250 million in a settlement with Microsoft.

SCO appears to be continuing its history of taking on technology giants in court. While it achieved some success against Microsoft three years ago, the small software company is now taking on IBM, which generates more patents than any other technology company, at the height of its powers.