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SCO Now Wants $5 Billion from IBM

SCO Now Wants $5 Billion from IBM

The SCO Group wants to amend its 11-month-old suit against IBM and substitute charges of copyright infringement for trade secret violations and up its demand for damages from $3 billion to a minimum of $5 billion, a nice round number.

Along with the trade secrets charge goes SCO's claims that IBM dipped into SCO's own OpenServer and UnixWare widgetry on behalf of Linux, not only code, but also know-how, concepts, idea, methodologies, standards, specifications, programming, techniques, architecture, design and schematics.

The move leaves SCO down to proving it owns derivative AIX and Dynix code that IBM claims it owns and that IBM put that derivative code in Linux.

SCO filed the amended suit with the federal court in Salt Lake City last week but it's unclear whether the thing's going to fly. SCO needs the magistrate doing the housekeeping for the trial judge to approve the change and so far she has said nary a word about it in public, not even at the hearing she held last Friday where IBM and SCO argued over their motions to compel evidence from each other.

At the end of that hearing Magistrate Brooke Wells threw up her hands and said all this commotion was very technical and took the matter under advisement, promising a written decision in a week. Presumably that decision will include an indication of whether or not she's going to accept the amendment.

Primarily, however, the decision is supposed to sort out IBM's claim that SCO didn't lay out its evidence that IBM ripped off SCO-owned Unix code and put it in Linux like the court ordered SCO to do and SCO's insistence that it can't go further than it has until IBM turns over, oh, all versions of AIX and Dynix along with who wrote it all and some 50 other items.

IBM complained to the court that producing all the stuff SCO wanted would be an undo burden on it and could take man-months.

IBM told the court that SCO admitted in a letter delivered to IBM late Thursday, hours before the hearing, that it had "failed to produce numerous responsive documents" and committed "to doing so at an unspecified time in the future."

The letter left IBM to argue that "In response to the court's order, SCO abandons any claim that IBM misappropriated its trade secrets, concedes that SCO has no evidence that IBM improperly disclosed Unix System V code and acknowledges that SCO's contract is grounded solely on the proposition that IBM improperly disclosed portions of IBM's own AIX or Dynix products, which SCO claims to be derivatives of Unix System V."

IBM wants to know exactly what lines of SVR5 are in Linux, which, it says, SCO must know "to allege the contributions were improper."

IBM told the judge that SCO's court filings and public statements are at odds. It said that "SCO has identified no more than approximately 3,700 lines of code in 17 AIX or Dynix files" that IBM is supposed to have contributed to Linux while SCO CEO Darl McBride told the Harvard Law School last week that a "million lines of code" were pilfered and that SCO "basically supplied that" - in other words the evidence - to IBM. "If the ‘million lines of code' in fact exist," IBM said, "then SCO should have identified them in response to the court's order."

IBM claims that SCO is "hinting" that "None of the allegedly improper disclosures made by IBM (or any of the other code in Linux to which SCO claims to have right) derive from Unix System V."

SCO, meanwhile, is basing its copyright claims on IBM's alleged breach of its Unix agreements and its breach of Sequent's Unix agreements and the fact that since SCO terminated IBM's AIX license last year, "IBM has continued to reproduce, prepare derivative works of and distribute Unix software, source code, object code, programming tools and documentation." SCO claims IBM infringement has been willful.

Novell of course claims dibs on the same copyrights along with the right to absolve IBM from any infringement or termination. SCO claims IBM induced Novell to claim copyright ownership and the right to waive away.

It would seem logical to conclude that the Novell slander suit would be heard first and, as a point of passing interest, in a legal tussle with Novell SCO loses its home court advantage.

IBM claims it has an irrevocable and perpetual Unix license.

The copyright infringement charge per se only adds a billion dollars to SCO's list of claimed damages. SCO breaks down the damages differently than it did last June when it amended the suit and went from a mere $1 billion to $3 billion in damages. It now says it wants a billion dollars for IBM's breach of its Software Agreement and another billion for IBM's breach of Sequent's Software Agreement, same as before, but introduces demands for a billion dollars each for IBM's alleged breach of its Sublicensing Agreement and Sequent Sublicensing Agreement.

These alleged sublicensing breaches are tied up with IBM flaunting the cancellation of its AIX license.

Last year SCO got to $3 billion by asking for a billion for unfair competition, a charge that also seems to have disappeared as a core component.

SCO conceives of the $5 billion as only a floor. It has other demands it hasn't put a number on that would have to be decided at trial.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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Most Recent Comments
Fecal Extrusion 02/19/04 05:45:05 PM EST

Hey yangtsekid,

WHERE DO I SIGN UP???

Fecal Extrusion 02/19/04 05:44:04 PM EST

I'll personally give Darl McBride $20.00 if he withdraws
this silly frivolous suit.
It's more than he'll ever get from IBM, Novell, or anyone
else in the community!!!

yangtsekid 02/16/04 11:15:58 PM EST

Kill $co and M$,are you ready?

J. W. N. 02/16/04 10:19:54 AM EST

Is anybody interested in participating in a class action lawsuit against SCO?

Grounds for the suit would include the following:

* "Undermining the credibility of Unix and Linux”
(due to their poor implementation)

* Malicious Criminal damage to Linux’s credibility

* "Slandering" Unix by poor implementations.

* Contribution to Microsoft Windows monopoly

BTW - it is too bad you cannot sue for stupidity and ignorance. SCO would definitely qualify for that as well.

Any attorneys out there?? Sounds like a good case to me.

Paulo Santiago Ribeiro 02/15/04 07:19:54 PM EST

So I'm a bit confused now. I've read before
somewhere a "Proof" why GPL and Free Software
couldn't exist. Where was said about copyright
ownership on original works, and derivative
works. The logic was something like this, First,
to distribute a derivative work, you need first
an agreement between the original rights owner
and the derivative work owner, but, there were a
clear separation on which the original rights
owner could impose over the derivative work
owner rights.

In that logic, the original rights owner
couldn't impose the derivative work owner the
obligation to open (or close) sources on it's
part of the whole work, if the original work has
closed sources, that should continue that way,
but couldn't step over the derivative works
rights to do what ever he wants with his work,
so that (in their view), GPL couldn't exist. In
my view GPL says, "I agree you may distribute
or do whatever you want with the derivative
work, IF you agree you will also copyleft your
work" (Don't force, just this are my rules to
give you the rights to work with this, you take
from a public thing, and may use if you still
leave this public, despite you may charge for it)

Now when SCO says:
"SCO, meanwhile, is basing its copyright claims
on IBM's alleged breach of its Unix agreements
and its breach of Sequent's Unix agreements and
the fact that since SCO terminated IBM's AIX
license last year, "IBM has continued to
reproduce, prepare derivative works of and
distribute Unix software, source code, object
code, programming tools and documentation." SCO
claims IBM infringement has been willful"
it seams they say the opposite, they MAY impose
the same restrictions for sequent work, and all
sequent work is virusely contaminated by UNIX
code (and even the knowledge which is on people
minds), so if you just have a new feature, you
may have an abstractions SO layer, if this
touches UNIX API, now it's unix, and so will be
everything which subsequently touch this layer.

They are so desperate they are by now throwing
nonsense affirmations every directions (even over

themselves)... their lawyers should be a bit
confused too since they want
desperately their 3-5 billion
cake slice no matter what they do for this...

A. Adams 02/14/04 01:44:11 PM EST

SCO are being selfish, and foolish. The $5 Billion is a far-fethched amount to begin with, but can only be argued with some measure of logic by them on the basis of future value of their (alleged) Linux code. What they fail to recognize is that their lawsuit against IBM, and threats against other users, could damage the Linux movement and thereby decrease the value of that code. They are selfishly seeking a one-time reward that could put a serious dent in the Linux movement. If they were to win it would be a pyric victory for them, and would delight Sun and Microsoft, because the very users who are turning to Linux as a source of low-cost operating system performance would no longer have that compelling reason to do so, and might very well abandon Linux plans and stay with the proprietary, higher-cost operating systems. They are threatening the future of Linux just as it starts to really gain momentum. They seem to have missed the fact that it is still not too late for most companies to abandon Linux plans and stay the course with Sun and Microsoft, thereby seriously decreasing the value of their supposed damages. If they win, Sun and Microsoft win. The rest of us would be the ones who lose.

A. Adams 02/14/04 01:42:48 PM EST

SCO are being selfish, and foolish. The $5 Billion is a far-fethched amount to begin with, but can only be argued with some measure of logic by them on the basis of future value of their (alleged) Linux code. What they fail to recognize is that their lawsuit against IBM, and threats against other users, could damage the Linux movement and thereby decrease the value of that code. They are selfishly seeking a one-time reward that could put a serious dent in the Linux movement. If they were to win it would be a pyric victory for them, and would delight Sun and Microsoft, because the very users who are turning to Linux as a source of low-cost operating system performance would no longer have that compelling reason to do so, and might very well abandon Linux plans and stay with the proprietary, higher-cost operating systems. They are threatening the future of Linux just as it starts to really gain momentum. They seem to have missed the fact that it is still not too late for most companies to abandon Linux plans and stay the course with Sun and Microsoft, thereby seriously decreasing the value of their supposed damages. If they win, Sun and Microsoft win. The rest of us would be the ones who lose.

Lawrence Whitfield 02/14/04 01:21:10 AM EST

$5 Billion? Only in America could a company demand such a ridiculous sum in damages/compensation. The people at SCO must be living in cloud cuckoo land, must be complete mental cases. In the more sane countries of the world such an action would be LAUGHED out of court!

Michael Hoffman 02/13/04 03:28:53 PM EST

You know if you subscibed to a daily newspaper instead the
weekly you seem to be using, you would find out about this stuff sooner.
I Also reccommend home delivery.