August 7, 2003 1:05 PM PDT
Big Blue files counterclaims against SCO
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In a 45-page document filed late Wednesday, IBM argues that because SCO distributed a version of Linux under the open-source General Public License (GPL), it can't claim that Linux software is proprietary. IBM also argues that SCO software violates four IBM patents and that the company interfered with IBM's business by saying it had terminated IBM's right to ship a Unix product, AIX.
IBM is seeking unspecified monetary damages and an injunction to stop SCO from shipping its software. The counterclaims came as part of Big Blue's answer to SCO's amended suit and were filed in the same federal district court in Utah.
"SCO has misused, and is misusing, its purported rights to the Unix operating system...to threaten the destruction of the competing operating systems known as AIX and Linux, and to extract windfall profits for its unjust enrichment," the IBM countersuit said.
In a statement, SCO reasserted its position that Linux violates SCO's intellectual property rights in Unix and called on IBM to back up its faith in Linux by providing its customers with legal protection for using the software.
"The continuing refusal to provide customer indemnification is IBM's truest measure of belief in its recently filed claims," SCO said.
The patent claims will be expensive to handle, said Brian Ferguson, an attorney with McDermott, Will & Emery. "That's a real smart move by IBM," he said. "I think that alone could cause some kind of early settlement negotiations that are going to really swing the pendulum around in IBM's favor--or at least to a situation of equipoise."
SCO has sued IBM for $3 billion, alleging that Big Blue moved proprietary Unix code into Linux and breached the terms of its Unix license with SCO. Separately from the IBM suit, SCO has said Unix code was copied directly into Linux and seeks payments of as much as $1,399 per computer from Linux users.
The bold initial lawsuit, followed by the equally bold threat that Linux users should pay or face potential legal action, has sent shock waves through the computing industry.
On Monday, the top Linux seller, Red Hat, filed a separate lawsuit that seeks a legal judgment about whether Linux violates SCO's Unix copyrights.
"What I'm getting a sense of now is there is an effort to counterpunch," said Gartner analyst George Weiss, who has warned clients to take SCO seriously. "What I thought the (Linux) community should be doing is shift the initiative away from SCO and throw them off balance into a defensive posture. Until Red Hat started its counterclaim, all the initiative was with SCO."
IBM said four SCO software packages violate four of IBM's patents. The patents cover a data compression technique, a method of navigating among program menus that use options that are arranged in a graphical tree, a method for verifying that an electronic message was received and a method for monitoring computing systems that are linked in a cluster.
The infringing SCO software, IBM said, is its UnixWare and OpenServer operating systems, its SCO Manager remote administration tool and its Reliant HA package, which enables one computer in a cluster to take over if another fails.
IBM argues in the counterclaims that SCO is prohibited from treating any code it distributed under the GPL as proprietary and that its current plan to require Linux users to pay isn't legal.
"By distributing products under the GPL, SCO agreed, among other things, not to assert--indeed, it is prohibited from asserting--certain proprietary rights (such as the right to collect license fees) over any source code distributed under the terms of the GPL. SCO also agreed not to restrict further distribution of any source code distributed by SCO under the terms of the GPL," the IBM counterclaims said.
The GPL is a license that Richard Stallman created in the 1980s as part of a plan to create a clone of Unix that anyone was free to use and modify. That project, Gnu's Not Unix (GNU), provided the legal and technological framework that Linux built upon. The GPL hasn't yet been tested in court, said Jeffrey Osterman, an attorney at Weil, Gotshal & Manges.
"The argument that SCO has essentially destroyed its trade secrets by selling software to the public that discloses those secrets without restriction is very interesting," Osterman said.
SCO's defense has been that it must actively and not inadvertently release proprietary code as open-source software. "It requires them to take the position they didn't know what they were selling, which, depending on your point of view, is a hard argument to make. You would tend to think you'd know what you're selling," Osterman said.
IBM's argument is similar to those made by Eben Moglen, a Columbia University law professor and the attorney for the Free Software Foundation, which enforces the GPL; by SCO's former Linux business partner SuSE; and by a German Linux advocacy organization called LinuxTag.
IBM's arguments go to the heart of the GPL.
"SCO has taken source code made available by IBM under the GPL, included that code in SCO's Linux products, and distributed significant portions of those products under the GPL. By so doing, SCO accepted the terms of the GPL, both with respect to source code made available by IBM under the GPL and with respect to SCO's own Linux distributions," the IBM suit said.
Because the GPL prohibits SCO from asserting proprietary rights over GPL-covered source code, for example by trying to collect license fees, "SCO's rights to distribute the copyrighted works of others included in Linux under the GPL have been terminated," IBM said.
IBM argues that SCO has breached the GPL by claiming ownership rights over Linux code; by seeking to collect license fees from Linux code; by copying, sublicensing or distributing Linux under terms of the GPL after its GPL rights ended; and by seeking to impose additional restrictions on recipients of Linux code.
IBM said SCO has damaged its business in several ways: breach of its contract with IBM, breach of the GPL, unfair competition, interference with prospective customers, and unfair and deceptive trade practices.
SCO has argued that IBM doesn't have the right to take Unix software IBM created--so-called derivative works--and move that software into Linux. IBM, however, labeled as "frivolous" SCO's argument that it has ownership rights with respect to all of the code in AIX.
SCO said it revoked IBM's license to ship AIX in June. In its countersuit, Big Blue reasserted its position that its AIX license is irrevocable and perpetual but then added a new twist that involves Novell, the company that owned Unix copyrights until selling them to SCO's predecessor in 1995.
IBM's suit revealed that Novell on June 12 effectively forbade SCO from terminating IBM's AIX license. SCO said it revoked the AIX license on June 16. Novell maintained the right to issue such instructions to SCO under the terms of the Unix sale, the suit said.
The letter Novell sent to SCO--included as an exhibit in IBM's countersuit--quotes a section of the contract under which Novell sold Unix to SCO's predecessor. Under that contract, Novell may require SCO "to amend supplement, modify or waive any rights under, or...assign any rights to, any (Unix System V) license to the extent so directed" by Novell. If SCO fails to do what Novell instructs, Novell "shall be authorized, and is hereby granted, the rights to take any action on (SCO's) own behalf."
The Novell letter also reveals the price IBM paid to buy its perpetual Unix license: $10.13 million.
SCO has said that under the terms of its contracts, IBM's Unix rights are perpetual and irrevocable only as long as IBM doesn't violate SCO's rights.