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IBM adds allegations in its feud with SCO

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International Business Machines Corp. has added a few new allegations to its pile against Lindon-based SCO Group.

SCO sued New York-based IBM in the spring, alleging that IBM had illegally placed SCO's Unix computer operating system source code into Linux, a free and changeable operating system for which IBM and other companies are making products. IBM later countersued.

Much of the amended countersuit, filed Thursday in U.S. District Court in Salt Lake, matched the original countersuit. A new counterclaim, however, alleges that SCO infringed on IBM's copyrights by including IBM contributions to Linux in SCO's Linux products without IBM's permission.

"Although SCO purports to respect the intellectual property rights of others — and has instituted litigation against IBM for alleged failures with respect to SCO's purported rights — SCO has infringed and is infringing a number of IBM copyrights and patents," the counterclaim document states.

SCO stock dropped more than 17 percent on Friday after news of the amended counterclaims became known. SCO stock fell $2.94 to close at $14.29. During the past year, the price has ranged from 78 cents to $20.85.

SCO spokesman Blake Stowell said Friday that the company was reviewing the counterclaims and likely would respond to them Monday.

Among repeated counterclaims in the document are that SCO has hurt IBM business by misrepresenting SCO's rights to Unix and disparaging Linux and the "open-source" movement. IBM has licensed with SCO to produce its own Unix version called AIX.

IBM is seeking unspecified compensatory and punitive damages and various declarations about SCO's rights and activities.

SCO, in addition to its suit against IBM, has warned more than 1,500 companies that they, too, may face lawsuits over use of Linux unless they buy a one-time license to SCO intellectual property for use with Linux.

Linux supporters have assailed SCO, agreeing with IBM's stance that its claims are baseless and that SCO is trying to get money through the courts that it could not obtain through its business operations.

In the counterclaim, IBM asserts that SCO has failed to establish a successful business around Linux and instead acquired rights to Unix in order to unify Unix and Linux. But that, too, failed, IBM says. "With apparently no other prospects, SCO shifted its business model yet again — this time to litigation and threats of litigation . . ." the counterclaim states.

IBM notified its sales force of the updated counterclaims through an internal memo, a copy of which was obtained by the Deseret Morning News. The memo also reiterates that IBM will not follow computer maker Hewlett-Packard Co., which earlier in the week vowed to protect customers from SCO's intellectual property claims if their Linux software is running on HP equipment.

"IBM and most other industry leaders do not indemnify for open-source code," the memo stated. "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."

IBM described HP's offer to indemnify customers as "limited" and "will be quite narrow and restricted and will inhibit customers from taking full advantage of the open-source development process. . . . IBM, and the rest of the industry, continues to move forward with its support for Linux."

IBM spokeswoman Trink Guarino declined to comment Friday on the counterclaims or the memo.

E-mail: bwallace@desnews.com