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SCO wants $5bn from IBM

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David Becker CNET News

Published: 09 Feb 2004 08:15 GMT

Linux antagonist SCO Group is seeking to add $2bn to its legal claim against computing giant IBM while changing the scope of the suit.

In an amended complaint submitted shortly before a hearing on Friday in the US District Court in Salt Lake City, SCO lists two new causes of action against IBM, both of which include claims for damages of at least $1bn (£0.54bn). The changes bring the total amount sought to about $5bn. Damages previously had been set at $3bn.

Friday's hearing focused on discovery, the process by which both sides must submit the evidence that they intend to bring forth in the trial. IBM and the court have been pushing SCO to reveal specific examples of allegedly infringing code. SCO said in a statement that both sides offered motions on Friday to compel discovery, with the court expected to rule on the issue in about a week.

The amended suit drops earlier allegations that IBM had misappropriated SCO trade secrets through its Linux development efforts, a substantial feature of the original complaint. The case now rests on claims that IBM violated its contract by creating derivative works based on SCO-controlled code -- and on new copyright-related claims.

SCO rattled the technology world last year when it sued IBM, claiming that the computing giant illegally incorporated into its Linux software source code from the Unix operating system, which SCO controls. The case has since ballooned into a far-ranging attack on Linux, attracting legal attention from Linux companies Novell and Red Hat and the ire of Linux supporters worldwide.

As previously reported, SCO's latest amendment to the IBM suit incorporates several new claims, including allegations that IBM violated SCO copyrights by continuing to distribute Unix and Unix-derived products, presumably including Linux, after SCO terminated IBM's Linux licence.

IBM's "post-termination actions have infringed, have induced infringement of, and have contributed to the infringement of copyright registrations of SCO and its predecessors," according to the amended claim. "Such actions have been wilful and have been done with knowledge of the copyright rights of SCO."

SCO also asserted that current Linux products violate its copyrights. "A significant amount of Unix protected code and materials are currently found in Linux 2.4.x, 2.5.x, and 2.6.x releases in violation of SCO's contractual rights and copyrights," SCO said in the complaint.

The original suit focused on alleged violations of IBM's contract, with SCO originally disclaiming any copyright aspects.

An IBM representative said the new claims and the jettisoning of the trade secret allegations show the weakness of SCO's position.

"SCO's proposed copyright claim is merely a follow-on from its prior position that it had a right to terminate IBM's Unix licence, with which we strongly disagree," the company said in a statement. "IBM continues to believe (SCO's) claims are without merit... and will continue to pursue its own counterclaims."

Additions and subtractions
The two new causes of action also relate to behaviour following the cancellation of IBM's contract. The claims argue that IBM on behalf of itself and Sequent, a server company IBM acquired in 1999, breached sublicensing agreements by continuing to distribute its AIX Unix software after the cancellation of the contract.

"From and after the AIX termination date, all distributions of AIX by IBM are in violation of the sublicensing agreement," the suit says. "IBM has disregarded and continues to completely disregard and repudiate its obligations under the sublicensing agreement, to plaintiff's substantial, continuing and ongoing damage."

The amended suit also drops allegations that IBM violated SCO trade secrets and incorporates new claims surrounding SCO's ongoing dispute with Novell, from which SCO purchased its rights to Unix. The amended suit says IBM encouraged Novell to make copyright claims against SCO as part of a campaign to undermine SCO's position.

"IBM had induced or otherwise caused Novell to take the position that Novell owned the copyrights," according to the suit. "At IBM's improper urging and inducement, Novell now claims that it can amend, modify and waive any and all terms of the software and sublicensing agreements."

The amended suit outlines in greater detail specific Linux elements SCO believes were illegally derived from Unix, including scalability and performance improvements, error-logging components, clustering support, threading, the AIX journaling file system and the NUMA scheduler.

With the amendment, the suit also includes new allegations that IBM violated its SCO contract by improperly exporting Unix software to India and countries subject to federal export controls, including Iran, North Korea and Cuba, echoing recent comments by SCO chief executive Darl McBride that characterised the spread of Linux as a threat to national security.

CNET News.com's Stephen Shankland contributed to this report.