The SCO Group claims damages over proprietary code

SCO Group has filed a $1bn trade secrets lawsuit against IBM that could derail the massive momentum built up around the free Linux operating system. SCO, which owns intellectual property on UNIX, a widely used operating system on which Linux is based, claims IBM took its proprietary code and transferred it to Linux, then released it into the global IT community.

It is seeking at least $1bn in damages from IBM. But it could potentially launch legal actions against other companies selling or using Linux. But SCO is not commenting on potential legal actions against others. "Our focus is on IBM. It has been taking our code wholesale and dumping it into Linux", said Darl McBride, CEO of SCO.

IBM has been unavailable for comments. But it is expected to use its large intellectual property portfolio, the largest in the computer industry, to protect itself from the claims of trade secret misappropriation. A large issue, however, is the effect on the global Linux developer community. There could be potentially other intellectual property claims that could freeze further development of Linux in its tracks. Linux has been gaining ground within businesses worldwide and IBM, the world largest computer company, has been the lead promoter. But other computer groups such as HP, Sun and Dell have also been selling Linux systems.

SCO purchased the rights to UNIX from AT&T in 1995. It has been selling its version of UNIX and licensing UNIX to thousands of companies. The license specifies that licensees can not take the software and use it in other software, which is what IBM is alleged to have done. SCO claims that IBM has promoted Linux at the expense of AIX, IBM’s version of UNIX, which has led to unfair competition and "marketplace injury".

The lawsuit was filed by the law firm of Boies, Shciller and Flexner. It is the law firm of David Bois, who was once the lead prosecutor for the Justice Department in the antitrust prosecution of Microsoft. Mr. McBride said SCO had contacted IBM about the matter. "But they told us to take a proverbial jump in the lake, which is why we filed the lawsuit", he said. Other companies are in discussion with SCO about the legal ramifications surrounding their use of Linux.

Rockville, March 10, 2003

Source: Financial Times