Guild Companies

We've been waiting for IBM to react in a significant way to the lawsuit that The SCO Group filed against it in March, and IBM's lawyers have finally stepped up to the plate with a countersuit that alleges, among other things, that SCO has violated IBM patents and the GNU General Public License, under which SCO it distributed its own brand of Linux.

I've read the counterclaim as well as slew of internal documents from SCO, IBM, and Novell, which is stuck in the middle of this lawsuit as the owner of certain licenses for the Unix operating system before the acquisition of some of those rights by Santa Cruz Operation (the predecessor of SCO). IBM essentially is refuting SCO's core claim, that IBM illegally violated its licenses to the IBM AIX and Sequent Dynix/ptx variants of Unix by moving code and related intellectual property into the open-source Linux 2.4 operating system. The IBM countersuit does not specifically refute these claims, but rather is a long laundry list, put together by IBM's outside lawyers, Cravath, Swaine, & Moore, that denies the claims SCO has made in its suit. (SCO amended its suit in June, raising the stakes from $1 billion to $3 billion in damages.)

IBM's lawyers are not just denying SCO's claims; they are fighting fire with fire, claiming that SCO itself, when it was called Caldera International, was a distributor the Linux 2.4 kernel, which, SCO alleges, has been enhanced with chunks from Unix. This Linux distribution business was done under the GNU General Public License, which requires that all enhancements to a program be freely distributed. IBM's position is that, if Caldera was distributing Linux--which may include Unix code owned by the old SCO that the new SCO alleges was stripped out and put into Linux--under the General Public License, it cannot go back now and claim that this code was not made open-source, and it is specifically prohibited from trying to extract license fees from Linux customers. This issue is complicated by the fact that Caldera bought the old SCO UnixWare and OpenServer Unix product lines and then renamed itself The SCO Group. If anything, the new SCO should be suing the people who used to run Caldera, too. And Red Hat, and SuSE, and every other Linux distributor. SCO has indemnified its own Linux customers, of course, but is asking for money from other Linux customers even before this case goes to trial.

If Unix code was misappropriated into Linux, there is no question that damage has been done. But it will be tough to pin this on any particular vendor in a court of law. The nature of open-source development is that kernel enhancements are donated and not tracked in the same way that professional software houses use software change management and version control software to keep track of who is doing what to a program. The open-source Linux effort has recently started using such tools, but they were probably not in use when--and if--code was taken from AIX, Dynix/ptx, or any other Unix and woven into Linux. It should be a fairly simple task to do a line-by-line comparison of Unix System V, UnixWare, AIX, Solaris, HP-UX, and Linux to settle the matter of misappropriated lines of code. Identifying who is responsible for this--and who is therefore responsible for paying monetary damages--is going to be a different matter entirely. Linux is coded as much by individuals as by companies. The fact remains, however, that there are probably only a few dozen people in the world who know how to program an operating system kernel for non-uniform memory architecture (NUMA) clustering in a way that works. Some circumstantial evidence is very strong. A jury will examine the evidence, and they will decide.

The jury will also get to decide if SCO has violated four IBM patents, which seem to be a bit more obscure than the ones that SCO is alleging that IBM has violated. IBM says that SCO is distributing UnixWare and OpenServer software that violates IBM patents related to data compression patent, graphical menu trees, electronically delivered data objects, and methods for monitoring and recovering subsystems in a distributed/clustered environment.

IBM is also making other claims in its countersuit. First, it claims that SCO has breached its contracts with AT&T and Novell for the licensing of Unix, for which IBM paid $10.1 million, for what it has called an irrevocable license. Novell has backed up that claim, and says it has the right to order SCO to cease and desist its claim that IBM does not have the right to distribute either AIX. SCO has not obeyed that order from Novell. Yet more for the lawyers to argue about. (SCO pulled IBM's Dynix/ptx license last week, by the way, after a two month waiting period where it notified IBM it would do this.) IBM says that SCO has made false statements about AIX (which is a violation of the Lanham Act), and has engaged in unfair competition, tortious interference, and unfair and deceptive trade practices. This is more or less what SCO is claiming about IBM. IBM is seeking compensatory and punitive damages, an injunction requiring SCO to stop making what IBM alleges are false claims about its Unix rights, and a cessation of the use of IBM patents.

In a letter to the IBM sales force about the countersuit, which was filed in the U.S. District Court in Utah, Bob Samson, vice president of sales in IBM's Enterprise Systems Group, quieted the IBM troops. "We see no merit in their claims and no supporting facts," he said. "Simply put, SCO's scheme is an attempt to profit from its limited rights to a very old Unix operating system by introducing fear, uncertainty, and doubt into the marketplace." After going over the high-level description of the countersuit, he warned IBMers to expect more trouble. "Make no mistake, SCO will continue to look for ways to create fear, uncertainty, and doubt. FUD, not facts, remains the focus of SCO's efforts. As the lawsuit continues, understand that the industry will resolve it."

IBM has requested a jury trial, and the date has been set for April 11, 2005. A jury will decide what the facts are in this case, not the CEOs and marketeers of IBM or SCO or Novell, as juries always do.

In the meantime, if you are worried about your exposure to any potential liabilities, make it IBM's problem. If IBM had $50 billion of cash in the bank, like Microsoft, it could afford to indemnify all of its 500,000 or so customers worldwide. But IBM doesn't have that kind of dough, and it has never demonstrated that kind of altruism in the past, and it certainly wouldn't it during a recession. Still, if SCO starts leaning on you because you are using AIX, OS/400 PASE, or Linux, lean on IBM. Let IBM fight this battle for you.