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Lindon firm sues IBM over Unix

SCO is seeking $1 billion, citing misuse of secrets

LINDON — Lindon-based SCO Group sued International Business Machines Corp., the world's second-biggest software maker, for $1 billion today in a suit that challenges the way IBM develops products using the Linux operating system.

Operating systems serve as the link between computer hardware and the various software programs or applications that run on a computer.

IBM transferred pieces of its proprietary Unix software into Linux, a violation of its license with SCO Group, which owns the rights to Unix, according to SCO chief executive Darl McBride. IBM has been pushing Linux, available for free on the Internet, as a lower-cost alternative to Microsoft Corp.'s Windows operating system and Unix competitors.

"IBM has taken our valuable trade secrets and given them away to Linux," McBride said. "It's a very cozy relationship."

IBM spokesman Joe Stunkard said the company, based in Armonk, N.Y., had not yet seen the lawsuit and declined to comment.

SCO, which changed its name in September from Caldera International Inc., has no plans to file lawsuits broadly against other users of Unix or Linux, such as Red Hat Inc. or Sun Microsystems Inc., McBride said.

SCO purchased the rights to Unix in 1995 for $145 million from Provo-based Novell Inc. SCO also holds the rights to more than 30,000 Unix contract licensees.

"This case is about the right of SCO to not have its proprietary software misappropriated and misused in violation of its written

agreement," McBride said Friday in a teleconference with analysts and journalists. "This case is and is only about contractual violations that we're alleging that IBM has made and that we are going to enforce."

McBride said he had sent a letter to IBM president and chief executive officer Samuel Palmisano which called for IBM to disengage in its anti-competitive actions.

"If these corrective steps are not taken by IBM within 100 days," McBride said, "SCO will revoke IBM's Unix license for AIX."

McBride said the company had been talking with IBM over a possible settlement of the case since December, but those negotiations reached an impasse.

"We are where we are now because we haven't been able to work those things out amicably," he said.

The essential core of Linux was developed in 1991 by Finnish programmer Linus Torvalds and is now updated by thousands of volunteer programmers who collaborate over the Internet. It's used in government agencies and financial firms, and companies such as Oracle Corp. and BEA Systems Inc. sell programs that run on the operating system.

Microsoft chief executive Steve Ballmer has said Linux is one of his company's biggest threats.

SCO shared trade secrets with IBM when the two companies teamed up to develop Unix for high-end 64-bit Intel chips, SCO said. IBM ended the relationship in 2001 and still continues to use the proprietary information, SCO said in its lawsuit.

"Over time, IBM made a very substantial financing commitment to improperly put SCO's confidential and proprietary information into Linux, the free operating system," the lawsuit alleges. "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."

Open source software is software dedicated to the public.

Linux didn't pose a threat to SCO and other Unix vendors when its development process remained "uncoordinated and random," SCO said in its lawsuit. Linux, once the "software equivalent of a bicycle," can become a "luxury car" with IBM's backing and cause SCO to lose billions of dollars in potential revenue, SCO said.

"The Linux end game has been enhanced by IBM's input," McBride said.

The suit against IBM was filed for SCO by attorney David Boies of Boies, Schiller & Flexner LLP. He previously represented the U.S. Justice Department in its antitrust case against Microsoft and also Al Gore in the 2000 election against rival U.S. presidential candidate George W. Bush over the voting controversy.

SCO hired Boies in January to probe possible intellectual property claims against Linux users who aren't licensed, the Wall Street Journal reported Jan. 22. The paper also said Linux was created in part by research done at Bell Labs in the 1970s and 1980s and not by Torvalds alone.

In a separate lawsuit settled in January 2000, Caldera and Microsoft Corp. ended an antitrust lawsuit filed by Caldera charging that Microsoft engaged in anti-competitive practices. While details of that settlement were not disclosed, analysts estimated that Microsoft paid Caldera between $155 million to $250 million.

Contributing: Bloomberg News; Dave Anderton