In-Depth

SCO vs. IBM: Big Blue Strikes Back

Company breaks silence by filing a counterclaim

• By Stephen Swoyer
• 08/12/2003

It’s been an unsettling five months for Linux advocates, despite SCO's failure to disclose any evidence in support of its claims (http://info.101com.com/default.asp?id=627).

The mood at LinuxWorld was undeniably upbeat, however, bolstered by a fresh counter-offensive from Linux vendor Red Hat Inc.—which announced that it had filed suit against SCO—and capped by a smashing rebuttal from IBM, which on Thursday finally went on the warpath against SCO.

Big Blue has been understandably tight-lipped since SCO stunned it with a $1 billion lawsuit in early March. Other than a filing in which it formally responded to SCO’s charges (http://info.101com.com/default.asp?id=1277), IBM hasn’t said a word about its legal strategy, nor has it addressed the merits (if any) of SCO’s controversial case.

So when Irving Wladawsky-Berger, general manager of IBM’s e-business on demand initiative, addressed SCO’s lawsuit and the future of Linux during his keynote address last Wednesday, he found himself speaking to a rapt audience.

"I fully expect that the current legal issues will be eventually resolved and forgotten," Wladawsky-Berger said, comparing SCO’s challenge to one of innumerable forgotten “road bumps” that important technologies encounter “on the road to success.”

Although he didn’t directly address SCO’s allegations, Wladawsky-Berger argued that Linux will become much more pervasive—“in everything from small devices to very powerful supercomputers”—and reiterated IBM’s commitment to the open source operating system. "IBM and the Linux community will continue working together closely to make this vision of the future a reality."

As it turns out, Wladawsky-Berger’s keynote speech was but an opening salvo in the fusillade of return fire that IBM leveled on SCO last week. Late Thursday night, Big Blue surprised many industry watchers—and no doubt gladdened the hearts of Linux advocates—by filing a counter claim against SCO in U.S. District Court in Utah, where the case is being adjudicated.

On its surface, Big Blue’s counter-suit smacks of equal parts déjà vu and comeuppance: IBM charged SCO with breach of contract, along with patent violations and—in an ironic, albeit anticipated, twist—breach of the GNU General Public License (GPL). Big Blue is seeking unspecified monetary damages, along with … an injunction to prevent SCO from shipping its software.

In its counter-suit, IBM claims that several SCO products—including its UnixWare and OpenServer Unix operation environments—violate its patents.

Big Blue also argues that once SCO has made code available under the GPL, it can not longer treat it as proprietary. Consequently, IBM reasons, SCO also can’t require Linux users to pay it licensing fees for use of its “proprietary” code.

Some industry observers anticipated a gambit of this kind but warned that it also has the potential to backfire, insofar as it could discourage companies from making contributions to the GPL.

“There is an argument making the rounds that at first glance is rather appealing to the open source set, namely that look, SCO, originally in the form of Caldera, released all of this code under the GPL anyway as part of their own Linux distribution,” summarized Gordon Haff, a senior analyst with consultancy Illuminata, in an interview last month. “That’s actually a very dangerous argument, because it says that if you do anything under the GPL, if you accidentally put any sort of proprietary code under the GPL—even by releasing it inadvertently—you’ve essentially given up all your rights.”

IBM’s counterclaim adds a new wrinkle to that argument, however, inasmuch as it contends that SCO took code that Big Blue made available under the GPL and added it to its own Linux products, which were also distributed under the GPL. By doing so, IBM’s counterclaim argues, “SCO accepted the terms of the GPL, both with respect to source code made available by IBM under the GPL and with respect to SCO's own Linux distributions." In its filing, Big Blue also disputes SCO’s claim that it has ownership rights to IBM’s AIX Unix operating system. SCO “revoked” IBM’s right to ship Unix in mid-June, at the same time, raising the stakes in its lawsuit to $3 billion. IBM has claimed that it has a “perpetual” Unix license that is irrevocable. (See http://info.101com.com/default.asp?id=1803 for details.)

Red Hat Agonistes

Red Hat jumpstarted the LinuxWorld festivities last week by filing a seven count suit against SCO in U.S. District Court for the District of Delaware. The Linux vendor wants a declaratory judgment that the versions of Linux which it distributes are not in violation of SCO's intellectual property rights.

Red Hat and other Linux vendors came under fire after SCO made noises ( http://info.101com.com/default.asp?id=1525) about bypassing them and taking its fight directly to their customers—Fortune 2000 IT organizations that have deployed Linux. Most major Linux vendors don’t indemnify customers for legal challenges that could arise from using their software; as a result, analysts say that customers themselves can be sued by SCO (http://info.101com.com/default.asp?id=2311).

At a news conference last week, Red Hat chairman and CEO Matthew Szulik claimed that his company had filed suit to stop SCO from exploiting “innuendo and rumor” in the form of “unfounded claims associated with Linux and the Linux industry.”

Red Hat also charges SCO with deceptive trade practices, false advertising, unfair competition and trade libel. It says that SCO’s actions have confused potential customers, and it’s seeking a permanent injunction to prevent SCO from exploiting fear among customers, investors and business partners that Red Hat’s products infringe on SCO’s intellectual property or trade secrets.

Business as usual for SCO

In a statement, SCO charged IBM with repeating “the same unsubstantiated allegations made in Red Hat’s filing earlier this week.” In a now-familiar retort, the embattled company reiterated its position that it is merely defending its intellectual property (IP) rights. SCO also threw down a gauntlet to IBM and other purveyors of Linux, however, effectively challenging them to put their money where their legal filings are.

“If IBM were serious about addressing the real problems with Linux, it would offer full customer indemnification and move away from the GPL license,” the SCO statement said.

Also last week, SCO unveiled its proposed Linux licensing scheme. Late last month, SCO offered to help Linux customers get “clean” by allowing them to pay a licensing fee to avoid potential litigation. No less an authority than Gartner’s George Weiss suggested that customers with substantial investments in Linux who were concerned about the prospects of litigation should consider paying SCO’s fee. (See http://info.101com.com/default.asp?id=2311.)

Last Tuesday, SCO fixed a price of $1,399 (for single CPU systems) on this licensing option, which it brands the “SCO Intellectual Property License for Linux." SCO is offering a special introductory price of $699 per CPU through October 15th of this year. “The license insures that customers can continue their use of binary deployments of Linux without violating SCO's intellectual property rights,” said Chris Sontag, SCO senior vice president, and general manager of the company’s SCOSource IP licensing initiative, in a release.