The Four Hundred--IBM Says Indemnity Is Useless, Amends Claims Against SCO

IBM has filed another set of counterclaims against The SCO Group, which has launched a $3 billion lawsuit alleging that Big Blue is in breach of its Unix contract and is responsible for leaking Unix content owned by SCO into the open source Linux 2.4 operating system. The counterclaims came a day after Hewlett-Packard granted its Linux customers who abide by strict rules indemnity against licensing fees sought by SCO and possible legal fees that could result from lawsuits filed by SCO against Linux users.

Bob Samson, vice president of sales at IBM's Systems Group, who has been IBM's point man to its sales force in explaining the legal wranglings with SCO, sent an internal memo late last week to IBM's sales force outlining IBM's position on indemnification and letting them know about the amended complaints. As we previously reported, IBM is not interested in indemnifying customers, and Samson explained why.

"IBM and most other industry leaders do not indemnify for open source code," Samson explained. "The typical approach to indemnity, and apparently HP's approach, as outlined in the press, we believe runs fundamentally counter to the Linux value proposition. Linux is developed to open standards and taps into the development power of many companies and individuals. Customers buy Linux principally for the quality of the operating system, broad vendor choice in hardware, distribution and maintenance and freedom to modify source code. Most indemnities are narrowly drawn and are often invalidated by customer activities, such as making modifications or combining the indemnified product with other code, which are central to the vitality of open source."

The memo went on to explain that, based on the limited information HP had released on its indemnity offer to its Linux customers, it will be "quite narrow and restricted and will inhibit customers from taking full advantage of the open source development process." (To find out more about the HP indemnity deal, see the story in our Windows and Linux newsletter.)

Samson echoed the party line on the SCO case: that IBM wants its day in court and will eagerly and vigorously defend itself once the case goes to trial in 2005.

To that end, IBM has filed yet more amended counterclaims to the SCO lawsuit, which will be tried in the Federal District Court in Utah. One of the new counterclaims, Samson explained in the memo, is that SCO has infringed on IBM's copyrights by copying and distributing IBM's own contributions to the Linux operating system without permission, after SCO breached the terms of the General Public License by terminating its own Linux distributions.

Back in August, IBM filed its first counterclaims in the SCO suit. IBM claimed then that SCO had violated four IBM patents and was distributing UnixWare and OpenServer software that violated those patents, which relate to data compression, graphical menu trees, electronically delivered data objects, and methods for monitoring and recovering subsystems in a distributed/clustered environment. IBM also alleged 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. IBM claimed further that SCO had made false statements about AIX (which is a violation of the Lanham Act), and had engaged in unfair competition, tortious interference, and unfair and deceptive trade practices. SCO has pulled IBM's Unix licenses for AIX and Dynix/ptx.

The amended counterclaim filed last week related to copyright infringement for seven pieces of code that IBM put into the open source community: Journaled File System, Enterprise Volume Manager, Enterprise Class Event Logging, dynamic logging, Linux support for the PowerPC and Power processors, Omni print driver, and next-generation POSIX threading. IBM says that these were all released under the GPL and that SCO has no right to stop others from distributing these contributions and cannot itself distribute them, because it is in violation of the GPL, because it is seeking to restrict the distribution of Linux. Ah, isn't circular legal reasoning fun?

Right now, the SCO case has had a minimal effect on the iSeries market. Linux is not yet a force in the iSeries installed base, and SCO has not attacked IBM's use of the AIX code in the OS/400 PASE AIX runtime environment. Moreover, IBM is not yet shipping AIX running on iSeries machines, but is slated to do so next year. IBM will probably go ahead with its original plans for AIX support on the iSeries, ignoring the whole SCO issue until the matter is settled in court.