SCO bowls up to big blue for a billion

By Matt Whipp

Posted on 7 Mar 2003 at 15:13

SCO has filed a suit against IBM alleging unauthorised use of SCO Unix code that violates its licence terms.

Formerly Caldera, SCO claims intellectual property ownership of Unix libraries that allow programs on SCO's version of Unix to run on Linux systems. The company filed a suit to a District Court in Utah, alleging 'misappropriation of trade secrets, tortuous interference, unfair competition and breach of contract' on the part of IBM and that IBM had 'made concentrated efforts to improperly destroy the economic value of Unix, particularly Unix on Intel, to benefit IBM's new Linux services business'.

This latter allegation centres on a joint venture by SCO, IBM and a company called Sequent to develop a UNix version to run on Intel server chips. Project Monterey, as it was called, never saw the light of day, but SCO alleges that the technological development it put into the venture was then appropriated by IBM within its AIX Unix operating system.

SCO is seeking damages no less than $1bn, as well as additional damages for market injury and to revoke the Unix licences issued to IBM for AIX within 100 days.

IBM's Unix licence goes back to 1985 which it bought from the then-owners AT&T. HP and Sun Microsystems also license the technology for their Unix distributions.

SCO bought the Unix rights and two SCO products, OpenServer and UnixWare some 10 years later which at that point were in the possession of Novell Networks. In January of this year, SCO formed its SCOsource division, specifically tasked with investigating how to exercise its intellectual property rights and hired David Boeis of Boeis, Schiller and Flexner, who had taken the U.S. Justice Department's antitrust case against Microsoft.

'SCO is in the enviable position of owning the UNIX operating system,' said Darl McBride, president and CEO, SCO. 'It is clear from our stand point that we have an extremely compelling case against IBM. SCO has more than 30,000 contracts with UNIX licensees and upholding these contracts is as important today as the day they were signed.'

SCO also forms one corner of the UnitedLinux quartet, but has not said how or if its IP rights would affect the venture. It has confirmed that SCO Linux customers are fully licensed.

For the quarter ending last month, SCO showed revenues of $18m. It's guidance for the current quarter foresees as much as $25m, with $10m attributed to SCOsource.