what a fucking mess

Joseph S Barrera III joe@barrera.org
Fri, 07 Mar 2003 19:30:10 -0800

Microsoft must really be pleased.
I wonder just how ugly this will get.

- Joe


News Software 	

SCO sues Big Blue over Unix, Linux
By Stephen Shankland
CNET News.com
March 7, 2003, 4:07 AM PT

*SCO Group, inheritor of the intellectual property for the Unix 
operating system, has sued IBM for more than $1 billion, alleging Big 
Blue misappropriated SCO's Unix technology and built it into Linux.*

The suit, filed Thursday afternoon in the 3rd District Court of Salt 
Lake County in Utah, alleges misappropriation of trade secrets, unfair 
competition, breach of contract and tortious interference with SCO's 
business, the Lindon, Utah-based company said. SCO also sent a letter 
Thursday demanding that if IBM doesn't meet various demands, SCO will 
revoke IBM's license to ship its version of Unix, called AIX, in 100 days.

"We are alleging they have contaminated their Linux work with 
inappropriate knowledge from Unix," said Chris Sontag, senior vice 
president of operating systems at SCO and head of the company's SCO 
source effort to make more money from its intellectual property.

Analysts saw the move as a desperate one for SCO, a company that hasn't 
been profitable in its current incarnation.

"It's a fairly end-of-life move for the stockholders and managers of 
that company," said Jonathan Eunice, an Illuminata analyst. "Really what 
beat SCO is not any problem with what IBM did; it's what the market 
decided. This is a way of salvaging value out of the SCO franchise they 
can't get by winning in the marketplace."

SCO hasn't sued other companies that have Linux products--for example, 
Red Hat or SuSE, but Sontag didn't rule out such actions.

Laura Keeton, a spokeswoman for IBM, declined to comment on the matter.

However, Steve Mills, senior vice president of IBM's software group, 
told CNET News.com in an earlier interview that he didn't see any 
intellectual property concerns between Unix and Linux. He also was 
critical of SCO's efforts.

"What SCO is doing raises a bunch of questions," Mills said. "Instead of 
building customer value, they're chasing people saying, 'License 
technology from us.' To me it's an odd strategy."

IBM has a large arsenal of its own intellectual property, he said. Big 
Blue has been developing operating systems since the 1950s and "sits on 
a large collection of intellectual property" of its own.

Big Blue doesn't see any intellectual property concerns between Unix and 
Linux, Mills added.

Linux itself likely won't be directly affected, Eunice predicted. "If 
there's any impact on Linux, it'll be principally through fear, 
uncertainty and doubt," he said. "The principal winners in that would 
not be SCO, but Microsoft and potentially Sun."

Representing SCO is David Boies of Boies, Schiller and Flexner, the 
attorney who prosecuted the U.S. Justice Department's antitrust case 
against Microsoft and represented Al Gore in the vote-counting 
controversy in the presidential election.

SCO in January announced SCOsource, its strategy to seek licensing 
revenue more aggressively from Unix intellectual property the company 
owns. And the plan is moving quickly, beginning with a mechanism by 
which companies may license supporting Unix software "libraries" that 
let programs written for SCO Unix run on computers that actually use the 
Linux operating system.

"Companies that switch from competing in the marketplace to trying to 
enforce their basic patents and intellectual is a style of conducting 
business that isn't very conducive to getting a lot of business 
partners," Eunice said.

*Bold actions*

SCO isn't pulling in any punches, though: It's going after the biggest 
computing company and the one with the largest U.S. patent portfolio 
around. And it's not using gentle language.

"IBM is affirmatively taking steps to destroy all value of Unix by 
improperly extracting and using the confidential and proprietary 
information it acquired from Unix and dumping that information into the 
open source community," the suit said. "IBM's tortious conduct was also 
intentionally and maliciously designed to destroy plaintiff's business 
livelihood and all opportunities of plaintiff to derive value from the 
Unix software code in the marketplace."

Part of the bad blood in the suit stems from a flopped partnership 
called Project Monterey under which IBM, SCO and now-extinct Sequent 
agreed to create a version of Unix for Intel's Itanium processors. SCO 
shared expertise with IBM about how best to run Unix on Intel processors 
for that project, the suit said.

IBM canceled its Monterey plans, however. "On or about May 2001, IBM 
notified plaintiff that it refused to proceed with Project Monterey, and 
that IBM considered Project Monterey to be 'dead.' In fact, in violation 
of its obligations to SCO, IBM chose to use and appropriate for its own 
business the proprietary information obtained from SCO," the suit said.

Linux's rapid maturity--for example, growing up to work on large 
multiprocessor servers--is evidence of the presence of Unix intellectual 
property, the SCO suit said. "It is not possible for Linux to rapidly 
reach Unix performance standards for complete enterprise functionality 
without the misappropriation of Unix code, methods or concepts to 
achieve such performance, and coordination by a larger developer, such 
as IBM," the suit said.

Added Sontag, "When they (IBM) started utilizing the same engineers that 
worked on the Unix System V source code and the ultimate derivative of 
it in the form of AIX, they have effectively been applying our methods 
and concepts, even if there isn't a single explicit line of code" that 
shows up in Linux.

Asked if there was no possibility such features could have been 
independently developed, Sontag responded, "On such short order, it 
seems highly improbable."

Eunice, who has been involved in Unix for years, questioned the accuracy 
of some of the history contained in the SCO suit. For example, the suit 
says that "AIX is a modification of (SCO's) licensed Unix that is 
designed to run on IBM's processor," but Eunice said IBM was unhappy 
with the performance of Unix kept only the interfaces higher-level 
software used to communicate with it.

"The AIX kernel...was not principally based on the Unix source code. It 
was based on their (IBM's) own development," Eunice said.

Some claims, though, have more potential merit, Eunice said. One is that 
creating Unix on Intel processors needed expertise that SCO developed 
but IBM lacked, Eunice said. Another claim is that it would have been 
impossible for IBM to re-create versions of SCO libraries without SCO's 
actual code.

*A complicated Unix history*

Unix was invented more than 30 years ago by AT&T's Unix Systems 
Laboratories, and the Unix ideas have spread widely since then. Linux 
works in many ways identically to Unix, making it relatively easy to 
translate Unix software to Linux.

AT&T sold the Unix intellectual property to Novell Networks, which in 
turn sold it to the Santa Cruz Operation. Caldera International, a 
seller of Linux, then acquired from SCO the Unix rights and two SCO 
products, OpenServer and UnixWare. Then last year, Caldera changed its 
name to SCO Group to reflect the fact that most of its revenue came from 
its SCO business and not from the Linux products.

In the suit against IBM, SCO uses a former name, Caldera Systems.

In the most recent quarter, ended Jan. 31, SCO had a net loss of 
$724,000 on revenue of $18 million. In the current quarter, revenue 
should increase to $23 million to $25 million, with $10 million coming 
from SCOsource, the company said.

While SCOsource will mean a boost over that quarter's revenue, McBride 
cautioned in a statement last week, "We are currently unable to estimate 
the level of potential revenue from this initiative in future quarters."

IBM isn't the only company that is wary of SCO's intellectual property 
plans. Richard Seibt, the new SuSE chief executive, expressed concern in 
an earlier interview.

"They have the right to make money off their intellectual property. The 
problem is, they should have done this six years before," Seibt said. 
And SCO Chief Executive Darl McBride, by raising questions about Linux, 
would "hurt himself more than anybody else," Seibt said.

Sun Microsystems, however, saw an advantage in SCO's legal action. 
"Sun's complete line of Solaris and Linux products...are covered by 
Sun's portfolio of Unix licensing agreements," John Loiacono, vice 
president of operating platforms group at Sun, said in a statement.

SCO is a founding member of UnitedLinux, a four-company consortium that 
bases a common version of Linux on SuSE's product. "They are full 
members of UnitedLinux. We expect them to stick to the rules. They 
signed up as an open source (company). They buy into the GPL 
philosophy," Seibt said.

Sontag declined to comment on how his company's actions would affect its 
UnitedLinux partners, but said customers who buy Linux from SCO have no 
intellectual property concerns. "Those that purchase our Linux product 
have nothing to fear. They have our full license to our Unix 
intellectual property when they're purchasing our Linux products," he said.

*Intellectual property lawsuits booming*

Intellectual property litigation appears to be on the rise in the 
high-tech industry and for good reason: The settlements or verdicts are 
often quite lucrative.

Intergraph, which once made workstations but now specializes in 
software, got $450 million from Intel in two separate suits in the past 
year and could receive $150 million more from the Santa Clara, 
Calif.-based chipmaker in an appeal on one of the actions. Intergraph's 
income from operations in 2002 was $10 million, but net income including 
legal settlements came to $378 million.

The Huntsville, Ala.-based company currently has lawsuits pending 
against Dell, Hewlett-Packard, Gateway and Texas Instruments. The suits 
revolve around the same set of patents in the Intel actions.

Memory designer Rambus, meanwhile, is involved in lawsuits with 
Infineon, Micron and Hynix over memory patents dating back to 1990. 
Rambus' claims could be worth billions in royalties, experts have said.

"There is definitely an upswing" in intellectual property litigation, 
said Rich Belgard, a patent consultant.

CNET News.com's Michael Kanellos contributed to this report.

Wardate: 21:36-27MAR2003
Downlimit: 2731:26:03