Science Fair Project Encyclopedia
SCO v. IBM
On March 6, 2003, the SCO Group (formerly known as Caldera Systems) filed a $1 billion lawsuit in the US against IBM for allegedly "devaluing" its version of the UNIX operating system. The amount of alleged damages was later increased to $3 billion, and then $5 billion. SCO claimed that IBM had, without authorization, contributed SCO's intellectual property to the codebase of the open source, Unix-like Linux operating system. In May 2003 SCO Group sent letters to members of the Fortune 1000 and Global 500 companies warning them of the possibility of liability if they use Linux. Because of this, the stock price of SCO's stock (Nasdaq stock symbol SCOX) skyrocketed to around $US 20 in October of 2003, although as of February of 2005 it has since returned to $US 3 - $US 4, very near its original, pre-lawsuit level. For more information, see this table (courtesy Yahoo!), showing SCOX stock price history.
Since then, the claims and counter-claims made by both sides have escalated, with both IBM and Linux distributor Red Hat starting legal action against SCO, SCO making threatening remarks toward Linux users who do not take out SCO UNIX licenses, and SCO starting lawsuits against Novell, AutoZone and DaimlerChrysler.
On September 30, 2003, Judge Kimball granted the SCO Group's request for a delay until February 4, 2004, "to file any amended pleadings or add parties to this action". This pushes the start of the actual lawsuit back until 2005. The trial is scheduled to begin in November 2005.
- Misappropriation of trade secrets
- Unfair competition
- Interference with contract
- Breach of IBM Software Agreement
- Breach of IBM Sublicensing Agreement
- Breach of Sequent Software Agreement
- Breach of Sequent Sublicensing Agreement
- Copyright infringement
- Interference with contract
- Interference with business relationships
SCO's claims in press releases and interviews have changed repeatedly as the affair has progressed. SCO has also both claimed and denied that the alleged copyright violations involved the Linux kernel. Computerworld reported Chris Sontag of SCO as saying:
- "It's very extensive. It is many different sections of code ranging from five to 10 to 15 lines of code in multiple places that are of issue, up to large blocks of code that have been inappropriately copied into Linux in violation of our source-code licensing contract. That's in the kernel itself, so it is significant. It is not a line or two here or there. It was quite a surprise for us."
SCO refuses to allow access to the samples of code containing the alleged copyright violations except under a non-disclosure agreement (NDA). SCO's NDA would not only require that the signer keep confidential which lines of code SCO contested, but would also require that they hold confidential any information SCO told them, even if they already knew that information before being informed of it by SCO; all Linux kernel developers have considered this to be far too restrictive, so none of them have signed it. However, at SCO's annual reseller's convention in August of 2003 they revealed two short sections of code they alleged were copyright violations, and this code was later reprinted on the Heise website, a German computer magazine publisher.
On May 30, 2003, SCO Group's CEO Darl McBride was quoted as saying that the Linux kernel contained "hundreds of lines" of code from SCO's version of UNIX, and that SCO would reveal the code to other companies under NDA in July.  To put this into context, David Wheeler's SLOCCount estimates the size of the Linux 2.4.2 kernel as 2,440,919 source lines of code out of over 30 million physical source lines of code for a typical GNU/Linux distribution. Therefore, as per SCO's own estimate, the allegedly infringing code would make up about 0.001% of the total code of a typical GNU/Linux installation.  SCO has since upwardly revised this figure to over a million lines of code, however. 
SCO's major claims have now been reported as relating to the following components of the Linux kernel:
- symmetric multiprocessing (SMP),
- non-uniform memory access (NUMA) multiprocessing,
- the read-copy-update (RCU) locking strategy,
- SGI's Extended File System (XFS),
- and IBM's JFS journaling file system
These claims flow from the accusation of breach of contract. The contract between IBM and AT&T (to which SCO claims to be successor in interest) allows IBM to use the SVR4 code, but the SVR4 code, plus any derivative works made from that code, must be held confidential by IBM. According to IBM's interpretation of the contract, and the interpretation published by AT&T in their "$ echo" newsletter in 1985, "derivative works" means any works containing SVR4 code. But according to SCO's interpretation, "derivative works" also includes any code built on top of SVR4, even if that does not contain, or even never contained, any SVR4 code. Thus, according to SCO, any AIX operating system code that IBM developed must be kept confidential, even if it contains nothing from SVR4.
Free software/open source community reaction
- that the Linux operating system was unlikely to contain UNIX code, as it had been written from scratch by hundreds of collaborators, with a well-documented provenance and revision history that was entirely in the public view;
- that it made no technical sense to incorporate SCO UNIX code in Linux, as Linux had the technical features that are claimed to have been appropriated already implemented before SCO UNIX had them;
- that even if Linux and SCO UNIX had some code in common, this did not necessarily mean that this code was copied to Linux from SCO UNIX -- perhaps the common pieces of code had been legitimately copied from another open source operating system, perhaps a BSD-derived one, or one of the historical Unix versions previously released by SCO;
- that SCO (see Caldera Systems) had begun as a Linux company, and has added many Linux-like features to SCO UNIX, and any common code may have in fact been copied from Linux into SCO UNIX:
- and furthermore, that if such reverse copying from Linux itself had occurred, that the distribution of SCO UNIX binaries containing GPL'd contributions may therefore require SCO either to remove their product from the market until GPL'd code has been removed, or to release their source code under the GPL to their users;
- that even if Linux did contain copied SCO UNIX code, the UNIX source code had already been made widely available without a non-disclosure agreement, and therefore had no trade secret status (as a judge found in USL v. BSDi);
- that even if Linux did contain some UNIX code, the SCO Group had lost any right to sue IBM for trade secret or other intellectual property infringement by distributing Linux itself (their Caldera distribution) under the GNU General Public License (GPL), both before and after their announcement;
- and finally, that even if SCO were to have a valid claim against IBM, their distribution of Linux under the GPL precludes them from pursuing any other user of Linux.
SCO and its officers have been the subject of much criticism by the free software community, some of whom have stated that SCO's behavior may amount to illegal conduct. Indeed, SEC filings reveal that senior SCO executives dumped their personal holdings in SCO shortly after counter-suits were filed by IBM and RedHat, lending credence to the idea that the lawsuit's primary purpose is manipulation of SCO's stock price. SCO Group's CEO Darl McBride has been the subject of particular vituperation.
- "Quite frankly, I found it mostly interesting in a Jerry Springer kind of way. White trash battling it out in public, throwing chairs at each other. SCO crying about IBM's other women. ... Fairly entertaining."
- "I allege that SCO is full of it, and that the Linux process is already the most transparent process in the whole industry. Let's face it, nobody else even comes close to being as good at showing the evolution and source of every single line of code out there."
The Inquirer reported on June 15, 2003, that an unnamed Linux kernel programmer has written to SCO, threatening action based on their distribution of a Linux distribution that, according to their own claims, contains code not licensed under the GPL. According to the letter reproduced there, the programmer claimed that SCO's doing so was an infringement of his own copyright. SCO's response to this letter is not known.
On June 25, 2003, Eben Moglen, the counsel for the Free Software Foundation, released a fuller statement regarding the SCO lawsuit. In this statement, he reiterates many of the points made above, and states that:
- "As to its trade secret claims, which are the only claims actually made in the lawsuit against IBM, there remains the simple fact that SCO has for years distributed copies of the kernel, Linux, as part of GNU/Linux free software systems. [...] There is simply no legal basis on which SCO can claim trade secret liability in others for material it widely and commercially published itself under a license that specifically permitted unrestricted copying and distribution."
The GPL issue
Within a few months of the filing of the lawsuit, Eben Moglen, the Free Software Foundation's legal counsel, stated that SCO's suit should not concern Linux users other than IBM. In an interview with internetnews.com, he was reported as saying:
- "There is absolute difficulty with this line of argument which ought to make everybody in the world aware that the letters that SCO has put out can be safely put in the wastebasket," ...
- "From the moment that SCO distributed that code under the GNU General Public License, they would have given everybody in the world the right to copy, modify and distribute that code freely," ... "From the moment SCO distributed the Linux kernel under GPL, they licensed the use. Always. That's what our license says."
Apparently noticing the incongruity of their selling a Linux distribution while suing IBM for stealing their intellectual property and giving it to the developers of that operating system, the SCO Group then announced on May 14, 2003 that they would no longer distribute Linux. According to their press release, "SCO will continue to support existing SCO Linux and Caldera OpenLinux customers and hold them harmless from any SCO intellectual property issues regarding SCO Linux and Caldera OpenLinux products."
SCO currently claims:
- Any code belonging to SCO that might have been GPL'd was done by SCO employees without proper legal authorization, and thus is not legally GPL'd.
- That for code to be GPL'd, the code's copyright owner must put a GPL notice before the code, but since SCO itself wasn't the one to add the notices, the code was never GPL'd.
The GPL and the US Constitution
- [ Congress shall have power] to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.
SCO claimed that this pre-empts the GNU General Public License, since the main purpose of the GPL is to remove exclusive rights, and promote rights for all, that the GPL is therefore a violation of that part of the US Constitution. This may put into question the legality of transferring copyrights and contributing to the public domain, two activities which have long been "legal" in the United States.
If a court agreed with SCO on this, Section 7 of the GPL would then prevent Linux from being distributed in the United States. It also would potentially make any commercial re-licensing of intellectual property (such as SCO licensing Unix System V to other vendors for redistribution) unenforceable as the exclusivity of their rights has changed by allowing others to license their intellectual property.
Though most believe that the intended interpretation of "exclusive rights" allows the inventor to have the right to control distribution in a manner that allows others to have rights license commercially or otherwise which would include the right to license software to modify and redistribute under somewhat restrictive terms.
Novell enters the controversy
Novell entered the controversy by publishing on May 28, 2003, a press release concerning the SCO Group's ownership of UNIX. "To Novell's knowledge, the 1995 agreement governing SCO's purchase of UNIX from Novell does not convey to SCO the associated copyrights," a letter to the SCO Group's CEO Darl McBride said in part. "We believe it unlikely that SCO can demonstrate that it has any ownership interest whatsoever in those copyrights. Apparently you share this view, since over the last few months you have repeatedly asked Novell to transfer the copyrights to SCO, requests that Novell has rejected."
SCO later claimed to have discovered an amendment to their contract with Novell transferring partial ownership to SCO. Novell stated that the amendment "appears to bear a valid Novell signature, and the language, though convoluted, seems to support SCO's claim that ownership of some copyrights for Unix did transfer to SCO"; Novell also said that it could not find its own copy of the amendment.
But in subsequent letters to SCO that Novell released on December 22, 2003, Joseph LaSala Jr. , Novell's general counsel, argued that the amendment provided for a copyright transfer only under certain conditions that SCO has allegedly failed to meet.
SCO was quick to dismiss Novell's claims. "We see this as a fraudulent filing of copyright notices ... and we'll take the appropriate measures as necessary with our legal team," SCO CEO Darl McBride said during a conference call held to discuss his company's most recent financial results.
Fear, uncertainty and doubt
A number of Linux supporters have characterized SCO's actions as an attempt to create fear, uncertainty and doubt about Linux. Many believe that SCO's aim is to be bought out by IBM. Others have pointed to Microsoft's subsequent licensing of the SCO source code as a possible quid pro quo for SCO's action.
Univention GmbH , a Linux integrator, reported on May 30, 2003 it was granted an injunction by a Bremen court under German competition law that prohibits the SCO Group's German division from saying that Linux contains illegally obtained SCO intellectual property. If the SCO Group continues to express this position, they would have to pay a fine of 250,000 Euros. A similar injunction was sought around the same time in Poland.
On July 23, Open Source Victoria announced that they had filed a complaint with the Australian Competition and Consumer Commission, "asking the ACCC to investigate the SCO Group's activities in light of their unsubstantiated claims and their extortive legal threats for money against possibly hundreds of thousands of Australians."
IBM's AIX licence
Reuters reported that the SCO Group intended to revoke IBM's licence to use UNIX code in their AIX operating system on Friday, June 13, 2003 if no resolution is reached before then. IBM responded that they believe that SCO has no power to do so, as their license is "irrevocable". On the following Monday, June 16, 2003, CNET News.com reported that SCO had announced it had terminated IBM's licence. IBM continues to distribute and support AIX, and the SCO Group now states that they will be seeking an injunction to force IBM not only to stop selling and supporting AIX, but to return to the SCO Group or destroy all copies of the AIX operating system.
IBM counterclaims against SCO
- breach of contract
- Lanham Act violation
- Unfair competition
- Intentional interference with prospective economic relations
- Unfair and deceptive trade practices
- Breach of the GNU General Public License
- and four counts of patent infringement
In response to these counterclaims, SCO has asserted that the GPL is unenforceable, void, and violates the United States Constitution. If these claims are true, then the GPL'd applications that SCO continues to distribute (like Samba) are being distributed without the permission of the copyright owners of those applications (since the permission was the GPL itself), which would be illegal. Thus some speculate that, in order to remain legally consistent, SCO will claim that software that has been GPL'd is actually in the public domain.
- Copyright infringement
- This counterclaim involves an alleged copyright infringement by SCO of GPL-licensed IBM code in the Linux kernel. Some commentators have pointed out that if SCO manages to invalidate the GPL, they are highly likely to be caught by this counterclaim, as it is of the same form as their claim against IBM.
- Promissory estoppel
- Declaratory judgment
On March 29, 2004 IBM amended its counterclaims again. It dropped one of the patent infringement claims, but added 2 new Declaratory judgments of Noninfringement of Copyrights. One of these seeks a declaration that IBM's AIX-related activities do not infringe any of SCO's copyrights. The other one seeks a similar declaration about IBM's Linux-related activities.
The discovery portion of the lawsuit has been dragging on for an unusual amount of time. The basis for SCO's suit is that any code developed on top of SVR5 is a derivative work of SVR5 (which would include AIX), and that IBM has publicly admitted to contributing AIX code to the Linux kernel. Since SCO has never seen the AIX code, it has, as part of the discovery process, deposed IBM for the AIX code, so that it can compare AIX code to Linux kernel code. IBM, rejecting SCO's concept of derivative work, has deposed SCO for which lines of code it claims are infringing. SCO has responded that it can't determine which code is infringing until it has had the chance to look at the AIX code.
On December 5, 2003, in the first oral arguments relating to the discovery process, a judge granted IBM's two motions to compel against SCO, and deferred consideration of SCO's motions until later. This gave SCO a 30 day deadline to provide "with specificity" which lines of code in Linux they claim form the basis of their case. This was widely regarded as a first-round victory for IBM.  PDF
Examples of controversial code revealed
- SCO reveals a sample of alleged copied code at a reseller show: see Why SCO won't show the code
- Code appears to be historical UNIX code;
- UNIX creator Dennis Ritchie confirms that either he or Ken Thompson wrote this code, which is released under the BSD licence: see Ancient UNIX Released Under What Terms? and SCO Slideshow
- This code therefore appears to be perfectly legally incorporated into Linux, as originally believed by Linux advocates
- It is claimed that SCO removed original licence text from UNIX source, allegedly violating the BSD licence; see Embarrassing Dispatches From The SCO Front
Copyright claims, December 2003
In late December 2003, new developments involving copyright claims emerged.
SCO claimed in a press release to have sent DMCA notification letters alleging copyright infringement  Alleged copies of these letters were posted online at Groklaw and LWN. The letters give the names of 65 files in the Linux source code tree which supposedly incorporate "copyrighted binary interfaces". A rebuttal by Linus Torvalds was then posted on Groklaw.
- Please see SCO v. IBM Linux lawsuit: Press coverage for an extensive list of links to articles in various publications.
- Caldera's announcement for the licensing of certain Unix versions under the BSD license
- Greg Lehey's analysis of the code that SCO alleges is in violation of their copyright
- Bruce Perens' analysis of the code that SCO alleges is in violation of their copyright
- Photograph of a piece of controversial code, taken at SCO Forum
- Photograph of a piece of controversial code, taken at SCO Forum
- The FSF's / Eben Moglen's reply to SCO's claims that the GPL is invalid
- OSDL press release for a Q&A paper written by Lawrence Rosen
- SCO press release: "The SCO Group Announces Final Termination of IBM / Sequent's Contract to Use or License Dynix Software"
- The FSF is considering dropping SCO Unix support from GCC
- IBM's counterclaims against SCO (text transcription)
- SCO's "Intellectual Property Compliance License for Linux"
- SCO's legal filing
- SCO's amended filing
- Eric Raymond's response to the SCO filing
- Novell's announcement relating to the lawsuit
- Bruce Perens' response to the Novell announcement
- SCO vs. IBM: a decision matrix
- Greg Lehey's analysis
- Free Software Foundation Statement on SCO v. IBM
- Eben Moglen comments on SCO's claims (PDF file)
- Litigious Bastards Google Bomb attempt
Commentaries, Opinions etc.
- August 19, 2003: Second impressions (from SCO forum 2003), part 1
- August 19, 2003: Second impressions (from SCO forum 2003), part 2
- August 19, 2003: Second impressions (from SCO forum 2003), part 3
- June 23, 2003: Richard Stallman: SCO smear campaign can't defeat GNU community
- June 12, 2003: Eben Moglen: Free software matters special
- June 12, 2003: NZHeretic: The Trillian Project: Proof of SCO's actions
- June 9, 2003: Edward Felten: Lessons from the SCO/IBM Dispute
- May 28, 2003: Bruce Perens: SCO's Big Lie
- May 22, 2003: ZDNet, Eric Raymond: Tragedy to farce -- the SCO vs. IBM lawsuit
- May 19, 2003: news.com, Bruce Perens: The fear war against Linux
- August 15, 2003: Software Development Times: Interview with Linus Torvalds
- August 7, 2003: ZDNet: Interview with Red Hat CEO Matthew Szulik
- July 8, 2003: ZDNet: Interview with Linus Torvalds
- June 16, 2003: ZDNet: Interview with SCO's Darl McBride
- May 16, 2003: vnunet: Interview with SCO's Chris Sontag
- April 24, 2003: Computer Reseller News: Interview with SCO's Darl McBride
- SCO Group to Shoot Babies
- 404 Stolen SCO Code not found
- Ars Technica: The Nigerian SCO Connection
- The "Software Wars" Map
- Brent Michalski buys a SCO license
- Rick Moen: Parody: Modern SCO Executive
- SCO parody of a Monty Python's Cheese Shop sketch
- Someday the mountain might get 'em but the law never will
- www.sco.com is a weapon of mass destruction
- Simon's Comic Online Source -- scosource dot com
- GROKLAW, a weblog maintained by a paralegal researching the case
- The open source community's response
- A community wiki tracking the case
- The law office of Lewis A. Mettler
- Netcraft: What platform is sco.com running on?
- SCO vs IBM traffic rank according to Alexa
- Open Directory Project: SCO > Boycott, Lawsuits
- News reports on the case
Note: Please note that none of the various claims made have yet been tested in court.
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