SCO's Second Amended Complaint. That's if the judge says yes. UPDATE: He did.
The PDF. For anything important, look at the pdf, as always.
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Brent O. Hatch (5715)
Mark F. James (5295)
HATCH, JAMES & DODGE, P.C.
[address, phone]
David Boies
BOIES, SCHILLER & FLEXNER L.L.P
[address]
Stephen N. Zack
Mark J. Heise
BOIES, SCHILLER & FLEXNER L.L.P
[address, phone]
Attorneys for Plaintiff The SCO Group, Inc.
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH
THE SCO GROUP, INC., a Delaware corporation,
Plaintiff,
vs.
INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation,
Defendant.
|
SECOND AMENDED COMPLAINT
Case No. 03-CV-0294
Hon: Dale A. Kimball
Magistrate Judge Brooke C. Wells
|
_______________________________________________________________________________
Plaintiff, The SCO Group, Inc.,
a Delaware corporation (“SCO”), sues Defendant
International Business Machines Corporation (“IBM”) and alleges as follows:
Nature
of This Action
1. UNIX
is a computer operating system program and related software and documentation originally developed
by AT&T Bell Laboratories (“AT&T”). UNIX is widely used in the corporate,
or “enterprise,” computing environment.
2. Through
a series of corporate acquisitions, SCO presently owns all right, title and
interest in and to UNIX and UnixWare operating system source code, software
and sublicensing agreements, together with copyrights, additional licensing
rights in and to UNIX and UnixWare, and claims against all parties breaching
such agreements. Through agreements with UNIX vendors, SCO controls the
right of all UNIX vendors to use and distribute UNIX. These restrictions
on the use and distribution of UNIX are designed to protect the economic
value of UNIX.
3. A
variant or clone of UNIX currently exists in the computer marketplace called
“Linux.” Linux is, in material part, based upon UNIX source code and methods.
4. The
UNIX software distribution vendors, such as IBM, are contractually and legally
prohibited from giving away or disclosing proprietary UNIX source code and
methods for external business purposes, such as contributions to Linux, or
from otherwise using UNIX for the benefit of others. This prohibition
extends to derivative work products that are modifications of, or derivative works based on,
UNIX System V source code or technology. IBM is violating this prohibition, en masse, as though no
prohibition or proprietary restrictions exist at all with respect to the
UNIX technology. As a result of IBM’s wholesale disregard of its contractual
and legal obligations to SCO, Linux 2.4.x and 2.6.x and the development Linux kernel,
2.5.x, are replete with protected technology. As
such, the Linux 2.4.x and Linux 2.5.x and 2.6.x kernels are unauthorized derivatives of UNIX System
V.
5. This case is not about the debate about the relative merits of proprietary versus open source software. Nor is this case about IBM's right to develop and promote open source software if it decides to do so in furtherance of its independent business objectives, so long as it does so without SCO's proprietary information. This case is, and is only, about the right of SCO not to have its proprietary software misappropriated and misused in violation of its written agreements and well-settled law. 6. As
set forth in more detail below, IBM has breached its obligations to SCO,
induced and encouraged others to breach their obligations to SCO, interfered
with SCO’s business, and engaged in unfair competition with SCO, including
by:
a) misusing
UNIX software licensed by SCO to IBM and Sequent;
b) inducing,
encouraging, and enabling others to misuse and misappropriate SCO’s proprietary
software; and
c) incorporating
(and inducing, encouraging, and enabling others to incorporate) SCO’s proprietary
software into Linux open source software offerings.
7. As
a result of these breaches, SCO sent a notice of termination to Mr. Sam Palmisano,
the Chief Executive Officer of IBM on March 6, 2003. The termination notice
specified that, pursuant to SCO’s contractual rights under controlling agreements,
IBM’s right to use or distribute any software product based on UNIX System
V technology, including its own version of UNIX known as “AIX,” would be
terminated on June 13, 2003, unless such breaches were reasonably cured prior
to that time.
8. The
termination notice was based, in part, on IBM’s self-proclaimed contributions
of AIX source code to Linux, and use of UNIX/AIX methods for accelerating
the development of Linux in contravention of IBM’s contractual obligations
to SCO.
9. Pursuant
to its rights under the controlling agreements, IBM was entitled to 100 days
to cure its underlying contractual breaches, provided it was willing and
able to do so. Both parties were contractually required to “exert their
mutual good faith best efforts to resolve any alleged breach short of termination.”
10. To
that end, SCO did everything reasonably in its power to exert a good faith
effort to resolve the termination of IBM’s UNIX contract rights. Conversely,
during the 100-day period, IBM did not set forth a single proposal or idea
for cure.
11. SCO has therefore terminated
IBM’s right to use any part of the UNIX System V source code, including its
derivative AIX, effective as of June 13, 2003 (the “AIX Termination Date”).
12. For similar reasons and following a similar process, SCO has terminated IBM's right to use any part of Dynix/ptx, also a derivative work of UNIX System V, which was developed under license with SCO, effective as of July 30, 2003 (the "Dynix/ptx Termination Date").
13. As
of the AIX Termination Date, IBM is contractually obligated to discontinue
use of and return or destroy any and all copies of the Software Products
defined in the controlling agreements, which include UNIX System V source
code and all its derivatives, including AIX.
14. As of the Dynix/ptx Termination Date, IBM is contractually obligated to discontinue use of and return or destroy any and all copies of the Software Products defined in the controlling agreements, which include UNIX System V source code and all its derivatives, including Dynix/ptx.
Parties,
Jurisdiction and Venue
15. Plaintiff SCO is a
Delaware corporation with its principal place of business in Utah County,
State of Utah.
16. Defendant IBM is a
New York corporation with its principal place of business in the State of
New York.
17. Sequent Computer Systems,
Inc. (“Sequent”) was formerly an Oregon corporation that contracted with
SCO’s predecessor in interest, AT&T. Sequent was subsequently merged
into IBM in a stock transaction.
18. This Court has subject
matter jurisdiction pursuant to 28 U.S.C. §1331, 1332, 1338 and 1367. There is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000,
exclusive of interest and costs, and the copyright claims arise under federal law.
19. Venue is properly situated
in this District pursuant to 28 U.S.C. §§1391 and 1400.
Background Facts
The UNIX Operating
System
20. UNIX is a computer
software operating system. Operating systems serve as the link between computer
hardware and the various software programs (“applications”) that run on the
computer. Operating systems allow multiple software programs to run at the
same time and generally function as a “traffic control” system for the different
software programs that run on a computer.
21. By way of example,
in the personal computing market, Microsoft Windows is the best-known operating
system. The Windows operating system was designed to operate on computer
processors (“chips”) built by Intel. Thus, Windows serves as the link between
Intel-based processors and the various software applications that run on
personal computers.
22. In the business computing
environment for the Fortune 1000 and other large corporations (often called
the “enterprise” environment), UNIX is widely used. As detailed below, before IBM's involvement in and improper contributions to Linux, Fortune 1000 companies were not using Linux for mission critical applications, such as wire transfers and satellite control systems. Linux, as an operating system, simply was incapable of performing such high level enterprise computing before IBM's improper contributions to Linux.
23. The UNIX operating
system was originally built by Dennis Ritchie, Ken Thompson and other software
engineers at AT&T. After successful in-house use of
the UNIX software, AT&T began to license UNIX as a commercial product
for use in enterprise applications by other large companies.
24. Over the years, AT&T
Technologies, Inc. ("AT&T
Technologies"), a wholly owned subsidiary of AT&T, and its related
companies licensed UNIX for widespread enterprise use. IBM, Hewlett-Packard,
Inc. (“HP”), Sun Microsystems, Inc. (“Sun”), Silicon Graphics, Inc. (“SGI”)
and Sequent became some of the principal United States-based UNIX licensees,
among many others.
25. IBM, HP, Sun, SGI and
the other major UNIX vendors each modified UNIX to operate on their own processors. Thus,
for example, the operating system known as “HP-UX” is HP’s version of UNIX. HP-UX
is a modification of, and derivative work based on, UNIX System V source code.
26. Similarly, the operating
system known as Solaris is Sun’s version of UNIX. Solaris is a modification
of, and derivative work based on, UNIX System V source code.
27. SGI’s UNIX-based operating
system is known as “IRIX.” IRIX is a modification of, and derivative work
based on, UNIX System V source code.
28. IBM’s UNIX-based operating
system is known as “AIX.” AIX is a modification of, and derivative work
based on, UNIX System V source code.
29. Sequent’s UNIX-based
operating system is known as “DYNIX/ptx.” DYNIX/ptx is a modification of,
and derivative work based on, UNIX System V source code.
30. The various identified
versions of UNIX are sometimes referred to as UNIX “flavors.” All commercial
UNIX “flavors” in use today are modifications of, and derivative works based
on, the UNIX System V Technology (“System V Technology”).
31. SCO is the sole and
exclusive owner of all Software and Sublicensing Agreements that control
use, distribution and sublicensing of UNIX System V and all modifications
thereof and derivative works based thereon. SCO is also the sole and exclusive
owner of copyrights related to UNIX System V source code and documentation
and peripheral code and systems related thereto.
32. During the 1990s the
enterprise computing market for high-performance workstation computers came
to be dominated by UNIX and the primary UNIX vendors identified above, each supplying
its own version of the UNIX operating system based on UNIX System V pursuant to the license agreements with SCO's predecessors in interest. UNIX
became synonymous with “workstation” computers that typically operated on
a RISC processing platform.
33. The RISC processing
platform provides high-power computing capabilities at a relatively higher
price for “workstation” computing. The alternative to “workstation” computing
is commonly known as “desktop” computing on personal computers. The operating
system market for “desktop” personal computers is dominated by Microsoft
Corporation and its various Windows-based operating system products. The
reason for this distinction is that most desktop computers (PC’s) are designed
to operate on Intel and Intel-compatible computing platforms. Most workstations
are designed to operate on variants of RISC processing platforms and RISC-compatible
computing platforms. PC systems and RISC systems are not hardware compatible with
each other. Thus, most versions of UNIX will not operate on Intel-based
PC’s for desktop computing; and Windows will not operate on RISC-based workstations
for enterprise computing.
34. Most of the primary
UNIX vendors identified above did not attempt to develop a UNIX “flavor”
to operate on an Intel-based processor chip set. This is because the earlier
Intel processors were considered to have inadequate processing power for
use in the more demanding enterprise market applications.
SCO’s Creation of a Market
for Intel – The Genesis of SCO OpenServer
35. As computers grew in
popularity to perform business functions, the processing power of Intel-based
processor chips also began to increase dramatically. Consistent with Intel
founder Gordon Moore’s prediction, computer chips remained inexpensive while
exponentially increasing in power and performance.
36. Seeing this emerging
trend, it became evident to SCO that Intel chips would gradually gain widespread
acceptance for use in the enterprise marketplace.
37. Therefore, while other
major UNIX vendors modified UNIX for their respective RISC-based computing
platforms, SCO developed and licensed the UNIX-based operating system for
Intel-based processors for enterprise use that is now known as “SCO OpenServer.”
38. SCO’s early engineers
faced difficult design challenges in modifying UNIX for effective use on
an Intel processing platform. The principal design constraint centered on the limited processing power the Intel chip possessed in the early 1980’s. The
Intel chip (designed as it was for personal computers) was not nearly as
powerful as the enterprise RISC chips used by IBM, Sun, SGI and others in their
respective UNIX offerings.
39. Despite the early
design constraint of Intel’s limited processing power, SCO was able to develop a version of UNIX for Intel PCs with full multi-processing and multi-user support as well as excellent reliability. A PC running SCO's OpenServer UNIX was a much more viable business application platform than the same PC running any available version of Windows. SCO found an appropriate
enterprise market niche for the early versions of SCO OpenServer as a highly reliable platform for business critical applications such as point-of-sale control, inventory control and transactions
processing. Intel systems running UNIX were
fully capable of performing multi-user business applications and could do so at a much lower cost (and just as reliably) as the proprietary mini-computer hardware sold by other UNIX vendors, such as Sun and IBM.
40. One example of a customer
well suited to the earlier version of SCO OpenServer software is McDonald’s
Corp. McDonald’s has thousands of stores worldwide and needs all stores
to operate on an integrated computing platform for ease of use, immediate
access to information and uniformity. However, the actual computing requirements
for each individual McDonald’s location are functionally simple—sales need
to be tracked and recorded, and inventory functions need to be linked to
sales. SCO OpenServer reliably fulfills McDonald’s computing requirements
at reduced cost.
41. SCO’s business model
for SCO OpenServer provides enterprise customers the reliability, extensibility
(ease of adding or changing functionality), scalability (ease of adding processors
or servers to increase processing power) and security of UNIX—but on inexpensive
Intel processor chips. This combination allowed customers to perform an
extremely high number of transactions and, at the same time, gather and present
the information from those transactions in an economical and useful way for
enterprise decision makers.
42. The simplicity and
power of this “UNIX on Intel” business model helped SCO grow rapidly. SCO
gained other large enterprise customers such as CitiGroup, K-Mart, Cendant,
Target Stores, Texas Instruments, Walgreens, Merck, Sherwin Williams, Radio
Shack, Auto Zone, British Petroleum, Papa John’s Pizza, Costco and many others.
43. As Intel’s prominence
grew in the enterprise computing market, SCO’s early version of OpenServer
also grew into the operating system of choice for enterprise customers who
wanted an Intel-based computing solution for a high volume of repetitive,
simple computing transactions.
44. SCO OpenServer is based
on the original UNIX Software Code developed by AT&T, but was modified
by SCO for the functionality described above. Thus, while performing single-function
applications, SCO OpenServer did so, and continues to do so, with the 99.999%
reliability of UNIX.
45. Over 4,000 separate
applications have been written by developers around the world specifically
for SCO OpenServer. Most of these applications are vertical applications
for targeted functions, such as point-of-sale control for specific industries,
inventory control for specific industries, and related functions.
SCO's Development of UnixWare on Intel
46. While the original SCO OpenServer operating system peforms with all the reliability and dependability of other UNIX systems, it was originally designed for the initially low processing power of Intel chips. Therefore, SCO OpenServer does not offer the same level of multiprocessor capabilities that other flavors of UNIX offer. 47. During or about 1993, SCO's predecessor in interest, Novell, Inc. ("Novell"), acquired from AT&T all right, title and interest in and to the UNIX software code, the AT&T Software and Sublicensing Agreements, the copyrights and related and ancillary products. For branding purposes, Novell renamed UNIX as "UnixWare." 48. On or about September 19, 1995, The Santa Cruz Operation, Inc. acquired all right, title and interest in and to UNIX and UnixWare source code, the AT&T Software and Sublicensing Agreements, the copyrights, claims arising after the closing date against any party and all related and ancillary products and rights from Novell, excepting only the right to certain existing ongoing royalty payments which was retained by Novell. 49. From and after September 1995, SCO dedicated significant amounts of funding and a large number of UNIX software engineers, many of whom were original AT&T UNIX software engineers, to upgrade UnixWare for high-performance computing on Intel processors. 50. By approximately 1998, SCO had completed the majority of this task. That is to say, UnixWare had largely been modified, tested and "enterprise hardened" to use Intel-based processors in competition against IBM and Power PC chips, the Sun SPARC chip and all other high-performance computing UNIX platforms for all complex computing demands. The term "enterprise hardened" means to assure that a software product is fully capable of performing under the rigorous demands of enterprise use. 51. SCO was ready to offer large enterprise customers high-end UNIX computing platforms based on inexpensive Intel processors. Given the rapid growth of Intel's performance capabilities and Intel's popularity in the marketplace, SCO found itself in a highly desirable market position. In addition, SCO still had its SCO OpenServer business for retail and inventory-targeted functions, with its 4,000 applications. 52. Prior to the events complained of in this action, SCO was the undisputed global leader in the design and distribution of commercial UNIX-based operating systems on Intel-based processing platforms.
Project Monterey
53. As SCO was poised and
ready to expand its market and market share for UnixWare targeted to high-performance
enterprise customers, IBM approached SCO to jointly develop a 64-bit UNIX-based
operating system for a new 64-bit Intel platform. This joint
development effort was widely known as Project Monterey.
54. At this point in time,
IBM's UNIX expertise was centered on its own Power PC processor. IBM had little or no expertise on Intel processors.
55. SCO, on the other hand,
had over 15 years of expertise in adapting UNIX to Intel based systems. Moreover,
SCO had spent the previous 18 months working closely with Intel to adapt
its existing UnixWare product to work on the new 64-bit Intel processor.
That project, known as "Gemini-64," was well underway when work
on Project Monterey was started. In furtherance of, and in reliance on,
IBM’s commitment to Project Monterey, which included IBM's commitment to SCO to create joint sales and marketing opportunities, SCO ceased work on the Gemini-64 Project
and expended substantial amounts of money and dedicated a significant portion
of SCO's development team to Project Monterey. Specifically, plaintiff and
plaintiff’s predecessor provided IBM engineers with valuable confidential information
with respect to architecture, schematics, and design of
UnixWare and the UNIX source code for both 32- and 64-bit Intel-based processors.
56. By about May 2001,
all technical aspects of Project Monterey had been substantially completed. The
only remaining tasks of Project Monterey involved marketing and branding
tasks to be performed substantially by IBM.
57. 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.”
The AT&T UNIX Agreements
58. AT&T Technologies
originally licensed the UNIX operating system software code to hundreds of
software licensees, including defendant IBM, for the UNIX operating system
software source code, object code and related schematics, documentation, modifications and
derivative works (collectively, the “UNIX Source Code”). To protect the
confidential and proprietary source code information, these license agreements,
as detailed below, contained strict limitations on use and distribution of
UNIX source and binary code. These provisions prohibited licensees from copying or replacing UNIX source code in competing systems that would diminish the value of UNIX.
59. When SCO acquired the
UNIX assets from Novell in 1995, it acquired all right, title and interest
in and to the UNIX operating system technology, including all claims against
any parties relating to any right, property or asset used in the business
of developing UNIX and UnixWare. As a result of this acquisition, SCO became
the authorized successor in interest to the original position of AT&T
with respect to all licensed UNIX software products.
60. There are two primary
types of software licensing agreements between AT&T Technologies and
its various licensees:
a) The
AT&T-related software agreements are collectively referred to hereinafter
as the “AT&T UNIX Software Agreements.”
b) The
AT&T-related sublicensing agreements are collectively referred to hereinafter
as the “AT&T UNIX Sublicensing Agreements.”
The AT&T UNIX Software Agreements
and the AT&T UNIX Sublicensing Agreements are sometimes collectively
referred to hereinafter as the “AT&T UNIX Agreements.”
61. Plaintiff is successor
in interest to, and owner of, all contractual rights arising from and related
to the AT&T UNIX Agreements.
The IBM Related Agreements
62. On February 1, 1985,
AT&T and IBM entered into certain AT&T UNIX Agreements:
a) Software Agreement Number Soft-00015 (“AT&T / IBM Software Agreement”
attached hereto and incorporated herein as Exhibit A);
b) Sublicensing Agreement Number Sub-00015A (“AT&T / IBM Sublicensing
Agreement” attached hereto and incorporated herein as Exhibit B).
63. AT&T and IBM also
entered into a side letter on that date (“AT&T / IBM Side Letter” attached
hereto and incorporated herein as Exhibit C).
64. In addition, AT&T
and IBM have entered into nearly 400 supplemental agreements over the years,
including Supplement No. 170 (Supplement No. 170 is attached hereto and
incorporated herein as Exhibit D). Supplement No. 170 is the document that
specifies the royalty amounts and computer CPUs upon which royalty amounts
were due to be paid by IBM.
65. Thereafter, Amendment
X to Software Agreement SOFT-00015, as amended, was executed on or about
October 16, 1996 by and among IBM, The Santa Cruz Operation, Inc. (“SCO”)
and Novell, Inc. (“IBM Amendment X” attached hereto and incorporated herein
as Exhibit E). Among other things, Amendment X effectuated a royalty buy-out
by IBM pursuant to the royalty terms and amounts specified in Supplement
No. 170, and it confirmed other restrictions on IBM, including restrictions on the use of source code.
66. Collectively these
agreements, side letter and amendment are referred to hereinafter as the
“IBM Related Agreements.”
The Sequent Agreements
67. On January 28, 1986,
AT&T and Sequent (now merged into IBM through a stock acquisition) entered into certain
AT&T UNIX Agreements:
a) Software Agreement Number SOFT-000321 (“Sequent Software Agreement”
attached hereto and incorporated herein as Exhibit F);
b) Sublicensing Agreement Number SUB-000321A (“Sequent Sublicensing Agreement”
attached hereto and incorporated herein as Exhibit G).
68. The Sequent Software
Agreement and the Sequent Sublicensing Agreement are sometimes collectively
referred to hereinafter as the “Sequent Agreements.”
69. The IBM Related Agreements and Sequent Agreements collectively identify the "Protected Materials."
Marketplace Value of UNIX
70. UNIX’s value in the
enterprise marketplace is largely a function of its reliability, extensibility,
and robust performance capability. That is to say, it virtually never needs
repair, it performs well under a wide variety of adverse circumstances, and
it can be extended throughout an enterprise and across multiple processors
to perform unified or disparate tasks in a seamless computing environment. Because
of these features, UNIX-based equipment has replaced mainframe computers
for all but the most demanding computing tasks. And, because UNIX-based
equipment is far cheaper than mainframe computing equipment, a customer who
cannot otherwise justify the cost of mainframe computers can otherwise gain
the advantages of “supercomputing” operations through use of UNIX-based equipment.
71. One or more of the
different versions of UNIX-based operating systems sold by Sun, IBM, SCO,
SGI, and others, is the operating system of choice for large enterprise computing
operations in virtually 100% of the Fortune 1000 companies.
72. UNIX gained this prominence
in the computing marketplace because of twenty years of development and over
one billion dollars invested by plaintiff and its predecessors to create
a stable, reliable operating system to perform the mission critical work
required by large enterprises.
73. The recent rise of
the global technology economy has been powered in large part by UNIX. Virtually
every mission critical financial application in the world is powered by UNIX,
including electronic transfers of funds. Real time stock trades are powered
by UNIX. Inventory controls and distributions are powered by UNIX. All
major power grids and all major telecommunications systems are powered by
UNIX. Many satellite control and defense control systems are powered by
UNIX. Virtually every large corporation in the world currently operates
part or all of its information technology systems on a UNIX operating system.
74. Based on its value
in the marketplace, UNIX has become the most widely used and widely accepted
operating system for enterprise, institutional and manufacturing applications
throughout the world.
Linux
75. Linux
is an operating system variant or clone of UNIX System V Technology. According
to leaders within the Linux community, Linux is not just a “clone,” but is
intended as a successor to UNIX System V. Linux, unlike UNIX, is distributed
without a fee to its users. Moreover, it is developed under and [sic] open source model, meaning that the source code is publicly available to all who want to see or use it.
76. IBM’s entry into the open source community
and its concerted efforts to control the community for its own economic benefit have substantially altered the use and impact of Linux.
77. In furtherance of its
plan to destroy its UNIX competitors, IBM has announced its intention to
make Linux, distributed to end users without a fee, the successor to all
existing UNIX operating systems used by Fortune 1000 companies and other
large companies in the enterprise computing market.
78. However, as is widely reported and as IBM executives
knew, or should have known, a significant flaw of Linux is the inability and/or unwillingness of
the Linux process manager, Linus Torvalds, to identify the intellectual property
origins of contributed source code that comes in from those many different
software developers. If source code is code copied from protected UNIX code,
there is no way for Linus Torvalds to identify that fact.
79. As a result, a very
significant amount of UNIX protected code and materials are currently found in Linux 2.4.x,
Linux 2.5.x and Linux 2.6.x releases in violation of SCO’s contractual rights and copyrights.
The Functional Limitations of Linux Before IBM’s Involvement
80. The first versions
of Linux evolved through bits and pieces of various contributions by numerous
software developers using single or dual processor computers. Unlike IBM, virtually none of
these software developers and hobbyists had access to enterprise-scale equipment
and testing facilities for Linux development. Without access to such equipment,
facilities and knowledge of sophisticated development methods learned in
many years of UNIX development it would be difficult, if not impossible,
for the Linux development community to create a grade of Linux adequate for
enterprise use.
81. Also, unlike IBM, the original Linux
developers did not have access to multiprocessor code or multi-processor
development methods needed to achieve high-end enterprise functionality.
82. To make Linux of necessary
quality for use by enterprise customers, it needed to be re-designed and
upgraded to accommodate complex multi-processor functionality that had taken
UNIX nearly 20 years to achieve. This rapid re-design was not feasible
or even possible at the enterprise level without (a) a high degree of design
coordination, (b) access to expensive and sophisticated design and testing
equipment; (c) access to UNIX code and development methods; (d) UNIX architectural
experience; and (e) a very significant financial investment. The contributions of IBM, which had access to UNIX System V Protected Materials and years of enterprise level experience, made possible this rapid redesign of Linux for enterprise use.
83. As a result of the foregoing, Linux is a clone of UNIX, including protected UNIX System V Technology, including modifications and derivatives thereof.
IBM’s Scheme
84. As market awareness
of Linux evolved, IBM initiated a course of conduct with the purpose and
effect of using Linux to unfairly compete in the enterprise market. At
that point in time, four important events were occurring simultaneously in
the enterprise software computing marketplace:
a)Intel chips were becoming widely demanded
by enterprise customers since Intel’s processing power had increased and
its cost had remained low;
b) SCO’s
market power in the enterprise marketplace was increasing based on the combined
capabilities of SCO OpenServer, SCO UnixWare and SCO’s unique position as
UNIX on Intel;
a) Sun and Microsoft's market share in the enterprise market continued to grow; and
b) IBM
was in the process of evolving its business model from software technology to services.
85. In the process of moving
from product offerings to services offerings, IBM dramatically increased
its staff of systems integrators to 120,000 strong under the marketing brand
“IBM Global Services.” By contrast, IBM’s largest historic competitor as
a seller of UNIX software, Sun Microsystems, has a staff of approximately
12,000 systems integrators. With ten times more services-related personnel
than its largest competitor, IBM sought to move the corporate enterprise
computing market to a services model based on free software on Intel processors.
86. By making the Linux
operating system free to end users, IBM could undermine and destroy the ability
of any of its competitors to charge a fee for distribution of UNIX software
in the enterprise market. Thus, IBM, with its army of Global Services integrators
who earn money by selling services, would gain a tremendous
advantage over all its competitors who earn money by selling UNIX
licenses.
87. To accomplish the end
of transforming the enterprise software market to a services-driven market,
IBM set about to deliberately and improperly destroy the economic value of
UNIX and particularly the economic value of UNIX on Intel-based processors.
88. As detailed elsewhere,
IBM misappropriated the confidential and proprietary information from SCO
in Project Monterey. IBM also misused its access to the UNIX source
code, in violation of the IBM Related Agreements.
89. On or about August
17, 2000, IBM and Red Hat Inc., the leading Linux distributor, issued a joint press release through M2 Presswire
announcing, inter alia, as follows:
IBM today announced a global agreement that enables Red Hat,
Inc. to bundle IBM’s Linux-based software.
IBM said it would contribute more than 100 printer drivers
to the open source community. With these announcements, IBM is making it
easier for customers to deploy e-business applications on Linux using a growing
selection of hardware and software to meet their needs. The announcements
are the latest initiative in IBM’s continuing strategy to embrace Linux across
its entire product and services portfolio.
Helping build the open
standard, IBM has been working closely with the open source community, contributing
technologies and resources.
90. Thereafter, on December
20, 2000, IBM Vice President Robert LeBlanc disclosed IBM’s improper use
of confidential and proprietary information learned from Project Monterey
to bolster Linux as part of IBM’s long term vision, stating:
Project Monterey was actually started before Linux did. When
we started the push to Monterey, the notion was to have one common OS for
several architectures. The notion actually came through with Linux, which
was open source and supported all hardware. We continued with Monterey
as an extension of AIX [IBM UNIX] to support high-end hardware. AIX
5 has the best of Monterey. Linux cannot fill that need today, but
over time we believe it will. To help out we’re making contributions to
the open source movement like the journal file system. We can’t
tell our customers to wait for Linux to grow up.
If Linux had all of the capabilities of AIX, where
we could put the AIX code at runtime on top of Linux, then we would.
Right now the Linux kernel does not support all the capabilities
of AIX. We’ve been working on AIX for 20 years. Linux is still young.
We’re helping Linux kernel up to that level. We understand where the kernel
is. We have a lot of people working now as part of the kernel team. At
the end of the day, the customer makes the choice, whether we write for AIX
or for Linux.
We’re willing to open source any part of AIX that the
Linux community considers valuable. We have open-sourced the
journal file system, print driver for the Omniprint. AIX is 1.5 million
lines of code. If we dump that on the open source community then are
people going to understand it? You’re better off taking bits and
pieces and the expertise that we bring along with it. We have made a
conscious decision to keep contributing.
91. IBM, however, was not
and is not in a position legally to “open source any part of AIX that the
Linux community considers valuable.” Rather, IBM is obligated not to
open source AIX because it contains SCO’s confidential and proprietary UNIX
source code, derivative works, modifications and methods.
92. Over time, IBM made
a very substantial financial commitment to improperly put SCO’s confidential
and proprietary information into Linux, the free operating system. On or
about May 21, 2001 IBM Vice President Richard Michos, stated in an interview
to Independent Newspapers, New Zealand, inter alia:
IBM will put US $1 billion this year into Linux, the
free operating system.
IBM wants to be part of the community that makes Linux successful. It
has a development team that works on improvements to the Linux kernel, or
source code. This includes programmers who work in the company’s Linux
technology center, working on making the company’s technology Linux-compatible.
That team of IBM programmers is improperly extracting
and using SCO’s UNIX technology from the same building that was previously
the UNIX Technology Center.
93. In a news article issued
by e-Business Developer on or about August 10, 2001, the following conduct
was attributed to IBM regarding participation in the open source software
movement:
Another example is when IBM realized that the
open-source operating system (OS) Linux provided an economical and reliable
OS for its various hardware platforms. However, IBM needed to make
changes to the source to use it on its full range of product offerings.
IBM received help from the open-source community
with these changes and in return, released parts of its AIX OS to open source. IBM
then sold its mainframes running Linux to Banco Mercantile and Telia Telecommunications,
replacing 30 Windows NT boxes and 70 Sun boxes respectively - obviously a
win for IBM, which reduced its cost of maintaining a proprietary OS while
increasing its developer base. IBM's AIX contributions were integrated
into the standard Linux source tree, a win for open source.
94. Again, “IBM’s AIX contributions”
consisted of the improper extraction, use, and dissemination of SCO’S UNIX
source code, derivative works, modifications and methods.
95. In a news article issued
by IDC on or about August 14, 2001, the following was reported:
IBM continued its vocal support
of the Linux operating system Tuesday, saying the company will gladly drop
its own version of UNIX from servers and replace it with Linux if the software
matures so that it can handle the most demanding tasks.
IBM executives speaking here
at the company's solutions developer conference outlined reasons for the
company's Linux support, pointing to features in the operating system that
could push it past UNIX for back-end computing. While they admit that
Linux still has a way to go before it can compete with the functions available
on many flavors of UNIX, IBM officials said that Linux could prove more cost-effective
and be a more user-friendly way to manage servers.
‘We are happy and comfortable
with the idea that Linux can become the successor, not just for AIX,
but for all UNIX operating systems,’ said Steve
Mills, senior vice president and group executive of the IBM Software
Group, during a news conference.
96. Continuing with its
“happy and comfortable” idea that Linux succeeds at the expense of UNIX,
on or about January 23, 2003, IBM executive Steve Mills gave a keynote speech
at LinuxWorld, a trade show, which was reported by Computer Reseller News, IBM’s
Mills: Linux Will be on Par with UNIX in No Time, January 23, 2003, inter
alia, as follows:
IBM will exploit its expertise in AIX to
bring Linux up to par with UNIX, an IBM executive said Thursday.
During his keynote at LinuxWorld here, IBM Senior
Vice President and group executive Steve Mills acknowledged that Linux
lags behind UNIX in scalability, SMP support, fail-over capabilities and
reliability--but not for long.
‘The pathway to get there is an eight-lane
highway,’ Mills said, noting that IBM's deep experience with AIX and
its 250-member open-source development team will be applied to make the
Linux kernel as strong as that of UNIX. ‘The road to get there is well
understood.’
* * *
Mills hinted that the company's full development
capabilities will be brought to bear in engineering the Linux kernel
to offer vastly improved scalability, reliability and support for mixed
workloads--and to obliterate UNIX.
97. The only way that the
pathway is an “eight-lane highway” for Linux to achieve the scalability,
SMP support, fail-over capabilities and reliability of UNIX is by the improper
extraction, use, and dissemination of the proprietary and confidential UNIX
source code, derivative works and methods. Indeed, UNIX was able to achieve
its status as the premiere operating system only after decades of hard work,
beginning with the finest computer scientists at AT&T Bell Laboratories,
plaintiff’s predecessor in interest.
98. Based on other published
statements, IBM currently has over 7,000 employees involved in the transfer
of UNIX knowledge into the Linux business of IBM, Red Hat, Inc. and SuSE
Linux AG (the largest European Linux distributor). On information and belief,
a large number of the said IBM employees currently working in the transfer
of UNIX to Linux have, or have had, access to the UNIX Software Code.
99. Consistent with these public pronouncements, IBM made significant contributions of the Protected Materials, including AIX and Dynix/ptx, in an effort to make Linux enterprise hardened. In violation of the IBM Related Agreements and Sequent Agreements and legal obligations regarding UNIX System V, including maintaining System V source code and any modifications or derivative works in confidence, IBM contributed key technology to Linux for enterprise use. Among the numerous contributions are the AIX Journaling File Systems, the AIX Enterprise Volume Management System, and the Dynix/ptx Read Copy Update technology.
100. The contribution of the Journaling File System ("JFS") was done in a series of "drops" of AIX code identified as "reference files" inside Linux. The first such drop occurred on or about February 2000, with multiple additions and significant follow-up work by IBM since that time to adapt AIX/JFS for enterprise use inside Linux. These drops of reference files do not necessarily become part of the source code in the Linux kernel, but rather are public displays of the Protected Materials so that anyone has access to them and can use them to construct similar file in Linux. The first drop contains (a) a partially functioning port, or transfer, of JFS from AIX to Linux; (b) a set of reference directories (named ref/) which contain the AIX reference version of AIX/JFS; (c) AIX/JFS-related utility files used to maintain and upkeep AIX/JFS; and (d) a set of directories (named directory ref_utils/) which contain the AIX reference version of utilities. Copies of AIX/JFS files into Linux are shown in Table A, below. Table A compares a 1999 version of AIX and shows the following similarities, demonstrating copying of code, structures and/or sequences.
Table A
AIX 9922A_43NIA File |
Line #s |
Linux 2.2.12 ref/File |
Line #s |
usr/include/jsf/inode.h |
16-37 |
include/linux/jfs/ref/jfs_inode.h |
84-95, 126-138 |
kernel/sys/vnode.h |
109-133 |
include/linux/jfs/ref/jfs_inode.h |
96-122 |
usr/include/jsf/inode.h |
39-40 |
include/linux/jfs/ref/jfs_inode.h |
189-90 |
usr/include/jsf/inode.h |
161-166 |
include/linux/jfs/ref/jfs_inode.h |
414-421 |
usr/include/jsf/inode.h |
172-180 |
include/linux/jfs/ref/jfs_inode.h |
37-48 |
usr/include/jsf/inode.h |
199-205 |
include/linux/jfs/ref/jfs_inode.h |
52-59 |
usr/include/jsf/inode.h |
62-66 |
include/linux/jfs/ref/jfs_inode.h |
286-290 |
usr/include/jsf/inode.h |
72-76 |
include/linux/jfs/ref/jfs_inode.h |
295-302 |
usr/include/jsf/inode.h |
83-158 |
include/linux/jfs/ref/jfs_inode.h |
322-411 |
These transfers of AIX/JFS to Linux are in violation of the IBM Related Agreements, and are an improper use of AIX for adaptation to a general operating system.
101. IBM has also improperly transferred a UNIX/AIX-based enterprise volume management system ("AIX/EVMS") to Linux. Again, this was done by IBM to transfer enterprise-class capabilities from AIX to Linux, and was a violation of the IBM Related Agreements and IBM's promise not to adapt AIX as a general operating system for a non-IBM company. The purpose of AIX/EVMS is to allow the management of disk storage in terms of logical 'volumes' in a large enterprise environment. Tools with this level of sophistication and performance were entirely unavailable and unknown to the open source development community prior to IBM's improper transfer to Linux. The actual transfer "patch" by IBM can be found at http://www.sourceforge.net/project/showfiles.php?group_id=25076&package_id=17436. The first code drop of AIX/EVMS by IBM was v0.0.1, which occurred on 03/21/2001. The first major release of AIX/EVMS by Linux was v1.0.0, in Linux 2.4, which occurred on 03/27/2003. The latest Linux release version of AIX/EVMS is v2.2.1, which occurred on 12/20/2003. The following table, Table B, identifies the AIX/EVMA "patches" of source code improperly transferred by IBM to the Linux 2.4 version.
Table B
AIX MERCED/9922A_43NIA |
Line #s |
EVMS 1.0.0 patches to Linux 2.4.x |
Line #s |
kernel/sys/IA64/bootrecord.h |
64-170 |
include/linux/evms/evms_aix.h |
157-263 |
usr/include/liblvm.h |
234-250 |
include/linux/evms/evms_aix.h |
311-327 |
usr/include/liblvm.h |
252-272 289-307 |
include/linux/evms/evms_aix.h |
329-349 |
usr/include/liblvm.h |
316-363 |
include/linux/evms/evms_aix.h |
352-400 |
usr/include/lvmrec.h |
24-92 |
include/linux/evms/evms_aix.h |
266-294 |
usr/include/lvm.h |
26-35 |
include/linux/evms/evms_aix.h |
6-11 |
kernel/sys/hd_psn.h |
32 |
include/linux/evms/evms_aix.h |
26 |
kernel/sys/vgsa.h |
37, 56-73 |
include/linux/evms/evms_aix.h |
13, 300-309 |
102. As with the other violations described herein, these transfers by IBM constitute improper use of AIX for and by others, improper transfers of AIX to others, and improper adaptation of AIX as a general operating system for a non-IBM company under the restrictions of the IBM Related Agreements. In disregard of the IBM Related Agreements, IBM has transferred this key enterprise technology from AIX to Linux.
104. Sequent also had certain contractual obligations and restrictions on its use of the UNIX System V code that it licensed from AT&T, SCO's predecessor. These restrictions, which are more fully stated in the Sequent Agreements, also restricted Sequent's use of the modifications they made to UNIX System V and derivative works of UNIX System V, including Sequent's Dynix/ptx. Like IBM, Sequent agreed to restrictions on Dynix/ptx, including that Dynix/ptx for or by others, and that it would not transfer any part of Dynix/ptx to parties who do not have a UNIX System V source code agreement with SCO. Sequent also agreed that they would maintain all of Dynix/ptx in confidence. In violation of these contractual restrictions, IBM provided entire files of Dynix/ptx source code as a patch to Linux 2.4.1-01, including Read Copy Update ("RCU").
105. RCU is a mechanism that can significantly improve the performance and scalability of multi-processor systems by allowing simultaneous access to data without the need for expensive and time consuming locking protocols. Dynix/ptx/RCU structures and sequences were originally offerred as a patch to the Linux 2.4 kernel by IBM, with rather limited functionality inside Linux 2.4. However, in the development of Linux version 2.6, the deployment of Dynix/ptx/RCU structures and sequences has spread into new uses inside Linux, including networking, device drivers, list management, and directory access. This demonstrates how improper contribution of a few hundred lines from Dynix/ptx has had a massive impact on Linux kernel efficiency, particularly relating to multi-processor functionality and processor memory synchronization. Virtually the entirre files identified in Table C that originated in Dynix/ptx were published as a patch to Linux 2.4.1-01, with only minimal changes.
Table C
DynixV v4.6.1 Files |
Linux 2.4.1-01 files |
kernel/sys/rclock.h |
include/linux/rclock. |
kernel/os/rclock.c |
kernel/rclock.c |
kernel/sys/kma_defer.h |
include/linux/kmemdef.h |
kernel/os/kma_defer.c |
kernel/kmemdef.c |
106. As stated, the entire files specified above show direct line-by-line copying of the files with the same name in Dynix as in Linux, with slight changes made to reflect some variations between the two operating systems. That the code in Linux comes from Dynix/ptx is further confirmed by the commentary in the Linux patch that expressly states that it is "[b]ased on a Dynix/ptx implementation by Paul McKenney..." Mr. McKenney was formerly an engineer at Sequent, and is now employed at IBM following IBM's acquisition of Sequent. After the first initial improper contribution of RCU by IBM, RCU became more widespread in the Linux kernel.
107. Code from Dynix/ptx files, but less than the entire file, was also copied line-for-line from DynixV v4.6.1 to Linux 2.4.1-01, with the file name and file line number in each code base identified appropriately.
Table D
DynixV v4.6.1 Files |
Line #s |
Linux 2.4.1-01 files |
Line #s |
kernel/os/kern_clock.c |
2028-2059 |
arch/i386/kernel/apic.c |
25-28, 662-664 676-684 |
kernel/os/kern_clock.c |
2028-2059 |
kernel/timer.c |
26-29, 681-683 688-697 |
kernel/i386/locore.s |
1487-1497 |
arch/i386/kernel/entry.S |
199-205 |
kernel/i386/trap.c |
1554-1563 |
arch/i386/kernel/traps.c |
52-54, 244-247, 331-334, 542-545, 659-662, 718-721 |
kernel/i386/startup.c |
2054 |
init/main.c |
30-33, 609-616 |
108. Although the actual count of lines of code in each of these contributions appears small, the impact is significant for a number of reasons: (a) In the case of JFS and EVMS, the number of lines that can be conclusively proven with the evidence currently available is shown. ther is much more copying that is anticipated to be found in discovery; (b) In the case of RCU, a highhly valuable and effective technological improvement can be expressed rather succinctly in computer code; and (c) In most cases, simple changes to code can have far reaching effects, and once the technology is revealed, thousands of developers can apply the technology to a myriad of places in the kernel.
IBM’s Coordination of Linux
Development Efforts
109. On
information and belief, IBM has knowingly induced, encouraged, and enabled
others to distribute proprietary information in an attempt to conceal its
own legal liability for such distributions:
What is wrong about this [Linux] distribution, is basically
the millions of lines of code that we never have seen. We don’t know if
there are any patent infringements [in this code] with somebody we don’t
know. We don’t want to take the risk of being sued for a patent infringement. That
is why we don’t do distributions, and that’s why we have distributors. Because
distributors are not so much exposed as we are. So that’s the basic deal
as I understand it.
Karl-Heinz Strassemeyer, IBM The Register, 11/19/2002, www.theregister.co.uk/content/4/28183.html
110. 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. As
part of this effort, IBM has heavily invested in the following projects to
further eliminate the viability of UNIX:
a)The Linux Technology Center was launched in
2001 with the intent and foreseeable purpose of transferring and
otherwise disposing of all or part of UNIX, including its derivative works,
modifications and methods, into an open source Linux environment;
b) The
IBM Linux Center of Competency was launched to assist and train financial
services companies in an accelerated transfer of UNIX to Linux with the advertised
intent and foreseeable purpose of transferring and otherwise disposing of
all or part of UNIX, including its derivative works, modifications and methods
into open source.
c)A carrier-grade Linux project has been undertaken
to use UNIX source code, derivative works, modifications and methods for
the unlawful purpose of transforming Linux into an enterprise-hardened operating
system;
d) A
data center Linux project has been undertaken to use UNIX source code, derivative
works, modifications and methods for the unlawful purpose of transforming
Linux into an enterprise-hardened operating system; and
e)Other projects and initiatives have been undertaken
or supported that further evidence the improper motive and means exercised
by IBM in its efforts to eliminate UNIX and replace it with free Linux.
109. But
for IBM’s coordination of the development of enterprise Linux, and the misappropriation
of UNIX to accomplish that objective, the Linux development community would
not have timely developed enterprise quality software or customer support
necessary for widespread use in the enterprise market.
FIRST CAUSE
OF ACTION
(Breach
of IBM Software Agreement)
110. Plaintiff
incorporates and re-alleges paragraphs No. 1-109, above.
111. As
set forth above, SCO is the successor to AT&T under that certain Software
Agreement originally executed by and between AT&T and IBM designated
as SOFT-00015. The Software Agreement specifies the terms and conditions
for use of UNIX System V source code, documentation and methods related thereto, together with modifications and derivative works created by IBM based on UNIX System V (collectively, the "Software Products").
112. With
respect to the rights granted for use of the Software Products
under Section 2.01 of the Software Agreement, IBM received the following:
[A] personal, nontransferable and nonexclusive
right to use in the United States each Software Product identified
in the one or more Supplements hereto, solely for Licensee’s own internal
business purposes and solely on or in conjunction with Designated
CPUs for such Software Product. Such right to use includes the right to modify such
Software Product and to prepare derivative works based
on such Software product, provided the resulting materials are treated
hereunder as part of the original Software Product. [Emphasis added.]
113. IBM
has violated §2.01 of the Software Agreement by, inter
alia, using and assisting others to use the Software Products
(including System V source code, derivative works, documentation rrelated thereto and methods based thereon)
for external purposes that are different from, and broader than, IBM’s own internal business purposes. By
actively supporting, assisting and promoting the transfer of UNIX technology to Linux,
and using its access to UNIX technology to accomplish this objective, IBM
is (a) using the Software Product for external business purposes,
which include use for the benefit of Linus Torvalds, the general Linux community
and IBM’s Linux distribution partners, Red Hat, Inc., Novell, Inc., SuSE Linux AG and
their respective subsidiaries; and is (b) directly and indirectly preparing unauthorized
derivative works based on the Software Products and unauthorized
modifications thereto in violation of §2.01 of the Software Agreement.
114. In addition, § 2.01 limited use to the United States. This limitation was modified in the Side Letter to include other countries, but at no time was IBM granted the right to use the Software Products (including System V source code, derivative works, modifications, documentation related thereto and methods based thereon) in India. On information and belief, IBM has violated this restriction by allowing the Protected Materials to be used in India.
115.
IBM
agreed in §2.05 of the Software Agreement to the following restrictions on use of
the Software Product (including System V source code, derivative works and
methods based thereon):
No right is granted by this Agreement for the use of Software
Products directly for others, or for any use of Software Products by
others.
116. IBM
has breached §2.05 of the Software Agreement by, inter alia, actively
promoting and allowing use of the Software Products, documentation and development methods
related thereto in an open and hostile attempt to destroy the entire economic
value of the Software Products and plaintiff’s rights to protect the proprietary
nature of the Software Products. By way of example and not limitation, IBM
has used protected UNIX source code, documentation, development notes and methods for others in accelerating development of
the 2.4.x kernel and above in, among others, the following areas:
(a) scalability improvements, (b) performance measurement and improvements,
(c) serviceability and error logging improvements, (d) NUMA scheduler and
other scheduler improvements, (e) Linux PPC 32- and 64-bit support, (f) AIX
Journaling File System, (g) enterprise volume management system to other
Linux components, (h) clusters and cluster installation, including distributed
lock manager and other lock management technologies, (i) threading, (j) general
systems management functions, and (k) other areas. But for the use by IBM
of these protected UNIX methods in Linux development, the Linux 2.4.x kernel,
2.5.x kernel, and 2.6.x kernel's capacity to perform high-end enterprise computing functions
would be severely limited.
117. IBM
agreed in §7.10 of the Software Agreement to the following restrictions on transfer of
the Software Product, including AIX as a derivative work of UNIX System V:
[N]othing in this Agreement grants to Licensee the right
to sell, lease or otherwise transfer or dispose of a Software Product in
whole or in part.
118. IBM
has breached §7.10 of the Software Agreement by, inter alia, transferring
portions of the Software Product (including System V source code, documentation, modifications, derivative
works and methods based thereon), including but not limited to the AIX Journaling
File System and all other UNIX-based source code publicly announced by IBM,
to Linus Torvalds for open distribution to the general public under a software
license that destroys the proprietary and confidential nature of the Software
Products.
119. IBM
has further stated its intention to transfer the entirety of AIX into open
source in anticipatory violation of its obligations under §7.10 of the Software
Agreement.
120. IBM
agreed in Side Letter ¶9, a substitute provision to §7.06(a) of the Software
Agreement, to the following restrictions on confidentiality of
the Software Product, including AIX as a derivative work of UNIX System V:
Licensee agrees that it shall hold Software Products subject
to this Agreement in confidence for AT&T. Licensee further
agrees that it shall not make any disclosure of such Software
Products to anyone, except to employees of Licensee to whom such disclosure
is necessary to the use for which rights are granted hereunder. Licensee
shall appropriately notify each employee to whom any such disclosure is made
that such disclosure is made in confidence and shall be kept in confidence
by such employee.
121. In
recognition of SCO’s right of confidentiality of the Software Products, IBM
directs all customers who need to view AIX source code to first obtain a
“read only” source code license from SCO as a condition to viewing any
part of AIX. For example, SCO received a letter
on or about March 4, 2003 from Lockheed Martin Corporation requesting verification
of the existence of a Software Agreement by and between Lockheed and SCO
as a condition to Lockheed obtaining access to view AIX source code. The
letter stated, in part, as follows:
LMATM is in the process of licensing [AIX] from IBM to
be used for integration purposes only. Per the attached supplement to the
subject document, contained within the AIX source code is third party IP
which must be licensed from the owner prior to IBM providing the AIX source
code to any licensee (see Prerequisite Source Licenses, Para.2.2).
* * *
2.2 Prerequisite Source License. IBM cannot
disclose (includes viewing) certain Third-Party Source Code to
any party who does not have a license that permits access to the Code. Prior
to receiving or accessing the Source Code described above in this Supplement,
LMATM must obtain the following Source Code Licenses:
a) AT&T Technologies, Inc., AT&T Information
Systems, Inc., or UNIX ™ Systems Laboratory Software Agreement No.
SOFT---and AT&T Information Systems, Inc. Software Agreement Supplement
for Software Product AT&T UNIX System V Release 4.0, or AT&T
Information Systems, Inc. Schedule for Upgrades (from UNIX System V Release
3.1 to UNIX System V Release 3.2 or from UNIX System V Release 3.1 International
Edition to UNIX System V Release 3.2 International Edition) or equivalent
SCO Group License.
122. IBM
has breached its obligation of confidentiality, and has failed to otherwise hold the Software Products in confidence for SCO by contributing portions of the Software Product (including System V source code, modifications, derivative works and
methods based thereon, together with documentation and development notes) to open source development of Linux and by using UNIX
development methods in making modifications to Linux 2.4.x kernel and above, which
are in material part, unauthorized derivative works of the Software Product. These
include, among others, (a) scalability improvements, (b) performance measurement
and improvements, (c) serviceability and error logging improvements, (d)
NUMA scheduler and other scheduler improvements, (e) Linux PPC 32- and 64-bit
support, (f) AIX Journaling File System, (g) enterprise volume management
system to other Linux components, (h) clusters and cluster installation,
including distributed lock manager and other lock management technologies,
(i) threading, (j) general systems management functions, and (k) others.
123. IBM
has further stated its intention to transfer the entirety of AIX into open
source in anticipatory violation of its obligations under §7.06 (a) of the
Software Agreement.
124. Export
of UNIX technology is controlled by the United States government. Thus,
SCO, IBM and all other UNIX vendors are subject to strict export control
regulations with respect to any UNIX-based customer distribution. To this
end, IBM agreed in §4.01 of the Software Agreement to restrictions on export of
the Software Product (including System V source code, derivative works, modifications, and
methods based thereon), as follows:
Licensee agrees that it will not, without the prior written
consent of AT&T, export, directly or indirectly, Software
Products covered by this Agreement to any country outside of the United States.
This provision was later modified
to allow export rights to several countries outside the United States. However,
no permission has ever been granted by SCO or its predecessors to IBM to
allow it to indirectly make available all or portions of the Software Product
to countries outside the United States that are subject to strict technology
export control by the United States government: viz., Cuba, Iran,
Syria, North Korea and Libya. IBM is ignoring and attempting to circumvent
the export control restrictions that apply to UNIX as it accelerates development
of Linux for enterprise use.
125. Thus,
IBM has breached §4.01 of the Software Agreement by, inter alia, making
extensive, advanced multiprocessor scaling functions of the Software Product,
including derivative works and methods based thereon, available for free
distribution to anyone in the world with a computer. As it relates to Linux
2.4.x and above releases, IBM is indirectly making the Software Product and
operating system modifications available to countries and organizations in
those countries for scaling single processor computers into multi-processor
supercomputers that can be used for encryption, scientific research and weapons
research.
126. IBM was aware of the importance of these restrictions and the need to protect the confidentiality of UNIX System V, including modifications and derivatives such as AIX and Dynix/ptx. Indeed, Amendment X, Paragraph 3.7, provides examples under which IBM is entitled to disclose UNIX and AIX source code to its development partners -- and examples under which IBM is not entitled to make such disclosures. Paragraph 3.7 of Amendment X provides as follows: The following illustrations arre intended to clarify and illustrate the relief provided in Subsection 2.1 of this Amendment [relating to disclosure of source code to contractors].
Company A, sublicensee of the Sublicensed Product [AIC] is a general computing system manufacturing firm. IBM may distribute Source Copies to Company A for Authorized Purposes.
However, IBM may not distribute Source Copies to Company A for purposes of making modifications to adapt the Sublicensed Products [AIX] as a general operating systtem for Company A's general computer hardware system. (Emphasis added).
127. As is made perfectly clear in Paragraph 3.7 of Amendment X, IBM may not use any Sublicensed Product from SCO, including AIX, for the purposed of making modifications to adapt AIX as a competing general operating system. IBM nonetheless has chosen to adapt UNIX, AIX, and Dynix/ptx for use in a competing operating system (i.e. Linux) in violation of its obligations to SCO.
128. SCO
has the self-executing contractual right to terminate IBM’s right to use
and distribute the Software Product, including derivative works and methods
based thereon, if IBM fails to fulfill one or more of its obligations under
the Software Agreement. This authority is contractually granted under the
following provisions of the IBM Related Agreements:
If Licensee fails to fulfill one or more of its obligations
under this Agreement, AT&T may, upon its election and in addition to
any other remedies that it may have, at any time terminate all the rights
granted by it hereunder by not less than two (2) months’ written notice to
Licensee specifying any such breach, unless within the period of such notice
all breaches specified therein shall have been remedied; upon such termination
Licensee shall immediately discontinue use of and return or destroy all copies
of Software Products subject to this Agreement. [Software Agreement, §6.03]
Regarding Section 6.03 of the Software Agreement and Sections
2.07 and 3.03 of the Sublicensing Agreement, we will not terminate your rights
for breach, nor will we give notice of termination under such Sections, for
breaches we consider to be immaterial. We agree to lengthen the notice period
referenced in such Sections from two (2) months to one hundred (100) days. If
a breach occurs that causes us to give notice of termination, you may remedy
the breach to avoid termination if you are willing and able to do so. In
the event that a notice of termination is given to you under either of such
Sections and you are making reasonable efforts to remedy the breach but you
are unable to complete the remedy in the specified notice period, we will
not unreasonably withhold our approval of a request by you for reasonable
extension of such period. We will also consider a reasonable extension under
Section 2.07 of the Sublicensing Agreement in the case of a Distributor who
is making reasonable efforts to remedy a breach.
In any event our respective representatives will exert
their mutual good faith best efforts to resolve any alleged breach short
of termination. [Side Letter, ¶ 5]
129. Consistent
with these rights, on March 6, 2003, plaintiff delivered a notice of termination
to Sam Palmisano, Chief Executive Officer of IBM (the “AIX Termination Notice”)
for IBM’s breaches of the Software (and Sublicensing) Agreement by IBM.
130. Following
delivery of the AIX Termination Notice, plaintiff took every reasonable step
to meet and confer with IBM regarding IBM’s breach of the Software Agreement
and Related Agreements.
131. IBM
has disregarded SCO's rights under the IBM Related Agreement by failing
to undertake any efforts to cure its numerous and flagrant violations thereunder. As
a result, effective June 13, 2003, the IBM Related Agreements are terminated
and IBM has no further rights thereunder.
132. IBM
nonetheless continues to operate under the IBM Related Agreements, and
use the Software Products and Source Code thereunder as though its rights
under the Agreement have not been terminated.
133. IBM
no longer has any right to use the UNIX Software Code or make modifications
or derivative works thereunder. In fact, IBM is contractually obligated
to “immediately discontinue use of and return or destroy all copies of
Software Products subject to this Agreement.”
134. As
a result of IBM’s breaches before termination, SCO has been damaged in the
marketplace for violations by IBM in an amount to be proven at trial, but
not less than $1 billion.
135. In
addition, and to the extent that IBM continues to completely repudiate its
obligations regarding the Software Product, plaintiff will sustain substantial
continuing and ongoing damages. These damages include the full amount IBM receives as a result
of its ongoing sales of AIX, including software, services and hardware.
136. Moreover,
if IBM does not return or destroy all source and binary copies of the Software
Products and/or continues to contribute some or all of these protected
materials to open source, SCO will be irreparably harmed. As a result,
SCO is entitled to a permanent injunction requiring IBM to return or destroy
all source code and binary copies of the Software Products and/or prohibiting
IBM from further contributions of the protected Software Products into
open source.
SECOND CAUSE
OF ACTION
(Breach
of IBM Sublicensing Agreement)
137. Plaintiff
incorporates and re-alleges paragraphs No. 1-136, above.
138. As
set forth above, SCO is the successor to AT&T under that certain Sublicensing
Agreement originally executed by and between AT&T and IBM designated
as SUB-00015A. The Sublicensing Agreement grants the right to distribute
object-based code of UNIX System V and modifications thereto and
derivative works based thereon.
139. SCO
has terminated IBM’s right to use and distribute the Software Product, including
derivative works and methods based thereon as of the AIX Termination Date,
June 13, 2003.
140. From
and after the AIX Termination Date, any and all distributions of AIX by IBM
are in violation of the Sublicensing Agreement.
141. IBM has disregarded and continues to completely disregard and repudiate its obligations under the Sublicensing Agreement, to plaintiff's substantial, continuing and ongoing damage. These damages include the full amount IBM receives as a result of its ongoing sales of AIX, including software, services and hardware.
142. Moreover, if IBM does not return or destroy all source and binary copies of the Software Products and/or continues to contribute some or all of these protected materials to open source, SCO will be irreparably harmed. As a result, SCO is entitled to a permanent injunction requiring IBM to return or destroy all source code and binary copies of the Software Products and/or prohibiting IBM from further contributions of the protected Software Products into open source.
THIRD CAUSE
OF ACTION
(Breach
of Sequent Software Agreement)
143. Plaintiff
incorporates and re-alleges paragraphs No. 1-142, above.
144. As
set forth above, SCO is the successor to AT&T under that certain Software
Agreement originally executed by and between AT&T and Sequent designated
as SOFT-000321. The Software Agreement specifies the terms and conditions
for use of UNIX System V source code, documentation and methods related thereto, together with mmodifications and derivative works created by IBM/Sequent based on UNIX System V (collectively, the "Software Products").
145. With
respect to the scope of rights granted for use of the System V source code
under Section 2.01 of the Sequent Software Agreement, Sequent received the following:
[A] personal, nontransferable and nonexclusive
right to use in the United States each Software Product identified
in the one or more Supplements hereto, solely for Licensee’s own internal
business purposes and solely on or in conjunction with Designated
CPUs for such Software Product. Such right to use includes the right to modify such
Software Product and to prepare derivative works based
on such Software product, provided the resulting materials are treated
hereunder as part of the original Software Product. [Emphasis added.]
146. IBM
has violated §2.01 of the Sequent Software
Agreement by, inter alia, modifying and assisting others to modify
the Software Products (including System V source code, derivative works, documentation related thereto and
methods based thereon) for purposes other than Sequent and/or
IBM’s own internal business purposes. By actively supporting, assisting
and promoting the transfer from UNIX to Linux, and using its access to UNIX
technology to accomplish this objective, IBM is (a) using the Software Product
for external business purposes, which include use for the benefit
of the Open Source Development Laboratory ("PSDL"), IBM's various joint venture partners in OSDL, Linus Torvalds, the general Linux community and IBM’s Linux distribution
partners, Red Hat, Inc., Novell, Inc. and SuSE Linux AG and their respective subsidiaries; and is (b)
directly and indirectly preparing unauthorized derivative works based
on the Software Product and unauthorized modifications thereto in
violation of §2.01 of the Sequent Software Agreement.
147. In addition, Section 2.01 limited use to the United States. At no time was Sequent granted the right to use the Software Products (including System V source code, derivative works, modifications, documentation related thereto and methods based thereon) in India. On information and belief, IBM has violated this restriction by allowing the Protected Materials to be used in India.
148.
Sequent
agreed in §2.05 of the Software Agreement to the following restrictions on use of
the Software Product (including System V source code, modifications, derivative works, documentation related thereto and
methods based thereon):
No right is granted by this Agreement for the use of Software
Products directly for others, or for any use of Software Products by
others.
149. IBM
has breached Sequent’s obligations under §2.05 of the Sequent Software Agreement
by, inter alia, actively promoting and allowing use of the Software
Products and development methods related thereto in an open and hostile attempt
to destroy the entire economic value of the Software Products and plaintiff’s
rights to protect the proprietary nature of the Software Products. Particularly,
IBM has caused all or materially all of DYNIX/ptx-based NUMA source code
and methods, and RCU source code and methods, to be used for the benefit
of Linux. But for the use by IBM of these protected UNIX methods in Linux
development, the Linux 2.4.x kernel through 2.6.x kernel's capacity to perform
high-end enterprise computing functions would be severely limited.
150. IBM
has even gone so far as to publish the DYNIX/ptx copyright as part of the
source code and documentation contribution of UNIX-derived RCU technology
it has improperly made available to the open source community. The following
copyright attribution is found in Linux kernel 2.4.x:
Copyright (c) International Business Machines Corp.,
2001 This program is free software; you can redistribute it and/or modify it
under the terms of the GNU General Public License as published by the
Free Software Foundation; either version 2 of the License, or (at your
option) any later version. This program is distributed in the hope that
it will be useful, but WITHOUT ANY WARRANTY; without even the implied warranty
of MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the GNU General
Public License for more details. You should have received a copy of the
GNU General Public License along with this program; if not, write to the
Free Software Foundation, Inc., 59 Temple Place - Suite 330, Boston, MA
02111-1307, USA. Author: Dipankar Sarma (Based on a Dynix/ptx implementation
by Paul Mckenney.
151. This
publication of the RCU copyright is an example of IBM’s blatant disregard
of SCO’s rights to control the use of the Software Product, including derivative
works and modifications thereof, pursuant to §2.05 of the Sequent Software
Agreement.
152. Sequent
agreed in §7.10 of the Sequent Software Agreement to the following restrictions
on transfer of the Software Product, including DYNIX/ptx as
a derivative work of UNIX System V:
[N]othing in this Agreement grants to Licensee the right
to sell, lease or otherwise transfer or dispose of a Software Product in
whole or in part.
153. IBM
has breached Sequent’s obligations under §7.10 of the Sequent Software Agreement
by, inter alia, transferring portions of the Software Product (including
System V source code, modifications, derivative works and methods based thereon), including
DYNIX/ptx source code, documentation and methods for NUMA, RCU and SMP technologies,
to the OSDL and/or Linus Torvalds for open distribution to the general public under a software
license that destroys the proprietary and confidential nature of the Software
Products.
154. Sequent
agreed under §7.06(a) of the Sequent Software Agreement, to the following
restrictions on confidentiality of the Software Product, including
DYNIX/ptx as a derivative work of UNIX System V:
Licensee agrees that it shall hold all parts of the Software
Products subject to this Agreement in confidence for AT&T. Licensee
further agrees that it shall not make any disclosure of any
or all of such Software Products (including methods or concepts utilized
therein) to anyone, except to employees of Licensee to whom such disclosure
is necessary to the use for which rights are granted hereunder. Licensee
shall appropriately notify each employee to whom any such disclosure is made
that such disclosure is made in confidence and shall be kept in confidence
by such employee.
155. IBM
has breached Sequent’s obligation of confidentiality by contributing portions
of the Software Product (including System V source code, derivative works, modifications,
and methods based thereon) to open source development of Linux and by using
UNIX development methods in making modifications to Linux 2.4.x kernel and above,
which are in material part, unauthorized derivative works of the Software
Product, including but not limited to DYNIX/ptx-based NUMA technology, source
code and methods, RCU source code and methods, and SMP source code and methods.
156. Export
of UNIX technology is controlled by the United States government. Thus,
SCO, Sequent, IBM and all other UNIX vendors are subject to strict export
control regulations with respect to any UNIX-based customer distribution. To
this end, Sequent agreed in §4.01 of the Software Agreement to restrictions
on export of the Software Product (including System V source
code, derivative works, documentation related thereto and methods based thereon), as follows:
Licensee agrees that it will not, without the prior written
consent of AT&T, export, directly or indirectly, Software
Products covered by this Agreement to any country outside of the United States.
No permission has ever been granted by SCO or its predecessors to Sequent
to allow it to directly or indirectly make available all
or portions of the Software Product to countries outside the United States
that are subject to strict technology export control by the United States
government: viz, Cuba, Iran, Syria, North Korea and Libya. IBM is
ignoring and attempting to circumvent the export control restrictions that
apply to UNIX as it accelerates development of Linux for enterprise use.
157. Thus,
IBM has breached §4.01 of the Sequent Software Agreement by, inter alia,
making extensive, advanced multiprocessor scaling functions of the Software
Product, including NUMA technology, RCU technology, SMP technology and other
derivative works and methods based thereon, available for free distribution
to anyone in the world with a computer. As it relates to Linux 2.4.x and above releases, IBM is indirectly making the Software Product and operating
system modifications, particularly NUMA technology, RCU technology and SMP
technology, available to countries and organizations in those countries for
scaling single processor computers into multi-processor supercomputers that
can be used for encryption, scientific research and weapons research.
158. SCO has the self-executing, contractual right to terminate IBM's right to use and distribute the Software Product, including modifications, derivative works and methods based thereon, if IBM fails to fultill one or more of its obligations under the Software Agreement. This authority is contractually granted under the following provisions of the Sequent Agreements: If Licensee fails to fulfill one or more of its obligations under this Agreement, AT&T may, upon its election and in addition to any other remedies that it may have, at any time terminate all the rights granted by it hereunder by not less than two (2) months' written notice to Licensee specifying any such breach, unless within the period of such notice all breaches specified therein shall have been remedied; upon such termination Licensee shall immediately discontinue use of and return or destroy all copies of Software Products subject to this Agreement. [Software Agreement, Section 6.03]
159. Consistent with these rights, plaintiff delivered a notice of termination to Sequent (the "Dynix/ptx Termination Notice") for IBM's breaches of the Software (and Sublicensing) Agreement.
160. Following delivery of the Dynix Termination Notice, IBM did not respond during the two months provided to cure.
161. IBM has disregarded SCO's rights under the Sequent Agreements by failing to undertake any efforts to cure its numerous and flagrant violations thereunder. As a result, effective July 30, 2003, the Sequent Agreements were terminated and IBM has no further rights thereunder.
162. IBM nonetheless continues to operate under the Sequent Agreements, and use the Software Products and Source Code thereunder as though its rights under the Agreements have not been terminated.
163. IBM no longer has any right to use the UNIX Software Code or make modifications or derivative works thereunder. In fact, IBM is contractually obligated to "immediately discontinue use of and return or destroy all copies of Software Products subject to this Agreement."
164.
As a result of IBM's breaches before termination, SCO has been damaaged in the marketplace for violations by IBM in an amount to be proven at trial, but not less than $1 billion.
165. In addition, and to the extent that IBM continues to completely repudiate its obligations under the Sequent Agreements regarding the Software Product, plaintiff will sustain substantial continuing and ongoing damages. These damages include the full amount IBM receives as a result of its ongoing sales of Dynix/ptx, including software, services and hardware.
166. Moreover, if IBM does not return or destroy all source and binary copies of the Software Products received pursuant to the Sequent Agreements and/or continues to contribute some or all of these Protected Materials to open source, SCO will be irreparably harmed. As a result, SCO is entitled to a permanent injunction requiring IBM to return or destroy all source code and binary copies of the Software Products and/or prohibiting IBM from further contribution of the protected Software Products into open source.
FOURTH CAUSE OF ACTION
(Breach of Sequent Sublicensing Agreement)
167. Plaintiff
incorporates and re-alleges paragraphs No. 1-166, above.
168. As set forth above, SCO is the successor to AT&T under that certain Sequent Sublicensing Agreement originally executed by and between AT&T and Sequent designated as SUB-000321A. The Sequent Sublicensing Agreement grants the right to distribute object-based code of UNIX System V and modifications thereto and derivative works based thereon.
169. SCO has terminated IBM's right to use and distribute under the Sequent Agreements the Software Product, including derivative works and methods based thereon as of the Dynix/ptx Termination Date.
170. From and after the Dynix/ptx Termination Date, any and all distributions of Dynix/ptx by IBM, or any part or sub-program or sub-routine thereof, is in violation of the Sequent Sublicensing Agreement.
171. IBM has disregarded and continues to completely disregard and repudiate Sequent's obligations under the Sequent Sublicensing Agreement, to plaintiff's substantial, continuing and ongoing damage. these damages include the full amount IBM receives as a result of its ongoing sales of Dynix/ptx, including software, services and hardware. 172. Moreover, if IBM does not return or destroy all source and binary copies of the Software Products and/or continues to contribute some or all of these protected materials to open source, SCO will be irreparabaly harmed. As a result, SCO is entitled to a permanent injunction requiring IBM to return or destroy all source code and binary copies of the Software Products and/or prohibiting IBM from further contributions of the protected Software Products into open source.
FIFTH CAUSE
OF ACTION
(Copyright Infringement)
173.
Plaintiff incorporates and re-alleges paragraphs No. 1-172, above.
174. As set forth above, SCO is the successor in interest to the IBM Related Agreements and the Sequent Agreements.
175. Despite termination of such Agreements, IBM has continued to reproduce, prepare derivative works of, and distribute UNIX software, source code, object code, programming tools, and documentation related to UNIX operating system technology, and has induced others to do the same.
176. SCO is the owner of copyright rights to UNIX software, source code, object code, programming tools, documentation related to UNIX operating system technology, and derivative works thereof. These materials are covered by numerous copyright registrations issued by the United States Copyright Office (the "Copyrighted Programs"). These registrations have been obtained by SCO and its predecessors in interest and are owned by SCO. For example, included among such registrations (attached as Exhibits H to U) are the following:
Table E
| Title | Registration Number | Registration Date |
H | UNIX Operating System Edition 5 and Instruction Manual | TXU-510-028 | March 25, 1992 |
I | UNIX Operating System Edition 6 and Instruction Manual | TXu-511-236 | April 7, 1992 |
J | UNIX Operating System Edition 32V and Instruction Manual | TXu-516-704 | May 15, 1992 |
K | UNIX Operating System Edition 7 and Instruction Manual | TXU-516-705 | May 15, 1992 |
L | Operating System Utility Programs | TXu-301-868 | November 25, 1987 |
M | UNIXWARE 7.1.3 | TX 5-787-679 | June 11, 2003 |
N | UNIX SYSTEM V RELEASE 3.0 | TX 5-750-270 | July 7, 2003 |
O | UNIX SYSTEM V RELEASE 3.1 | TX 5-750-269 | July 7, 2003 |
P | UNIX SYSTEM V RELEASE 3.2 | TX 5-750-271 | July 7, 2003 |
Q | UNIX SYSTEM V RELEASE 4.0 | TX 5-776-217 | July 16, 2003 |
R | UNIX SYSTEM V RELEASE 4.1ES | TX 5-705-356 | July 30, 2003 |
S | UNIX SYSTEM V RELEASE 4.2 | TX 5-762-235 | July 3, 2003 |
T | UNIX SYSTEM V RELEASE 4.1 | TX 5-762-234 | July 3, 2003 |
U | UNIX SYSTEM V RELEASE 3.2 | TX 5-750-268 | July 9, 2003 |
177. SCO and its predecessors in interest created the Copyrighted Programs as original works of authorship, and, as such, the Copyrighted Programs constitute copyrightable subject matter under the copyright laws of the United States. The Copyrighted Programs were automatically subject to copyright protection under 17 U.S.C. Section 102(a) when such programs were fixed in a tangible medium of expression. Copyright protection under 17 U.S.C. Section 106 extends to derivative works which are defined in 17 U.S.C. Section 101 to include works based on the original work or any other form in which the original work may be recast, transformed, modified or adapted.
178. Pursuant to U.S.C. Section 410(c), the certificates of copyright registrations for each Copyrighted Program constitute prima facie evidence of the validity of the copyrights and of the facts stated in the certificates. SCO and its predecessors' registered copyrights in the Copyrighted Programs are entitled to such statutory presumptions.
179. IBM's breaches of the IBM Related Agreements and the Sequent Agreements and its post-termination actions have infringed, have induced infringement of, and have contributed to the infringement of, copyright registrations of SCO and its predecessors. Such actions have been willful and have been done with knowledge of the copyright rights of SCO.
180. SCO has been damaged by IBM's conduct and has no adequate remedy at law. IBM's conduct has caused, and, if not enjoined, will continue to cause, irreparable harm to SCO. As a result of IBM's wrongful conduct, SCO is entitled to injunctive relief pursuant to 17 U.S.C. Section 502 and SCO's actual damages and IBM's profits as a result of the infringing acts pursuant to 17 U.S.C. Section 504(a), statutory damages to the extent applicable pursuant to 17 U.S.C. Section 504(b) and enhanced damages, together with attorneys' fees and costs pursuant to 17 U.S.C. Section 505.
SIXTH CAUSE
OF ACTION
(Unfair Competition)
181. Plaintiff incorporates and re-alleges paragraphs No. 1-180, above.
182.
Plaintiff
and its predecessors have built the UNIX System V Technology, the Unix Software
Code, SCO OpenServer, UnixWare and their derivatives through very substantial
efforts over a time span in excess of 20 years and expenditure of money in
excess of $1 billion.
183. IBM
has engaged in a course of conduct that is intentionally and foreseeably
calculated to undermine and/or destroy the economic value of UNIX anywhere
and everywhere in the world, and to undermine and/or destroy plaintiff’s
rights to fully exploit and benefit from its ownership rights in and to UNIX
System V Technology, the Unix Software Code, SCO OpenServer, UnixWare and
their derivatives, and thereby seize the value of UNIX System V Technology,
the Unix Software Code, SCO OpenServer, UnixWare and their derivatives directly
for its own benefit and indirectly for the benefit of its Linux distribution
partners.
184. In
furtherance of its scheme of unfair competition, IBM has engaged in the following
conduct:
a) Misappropriation
of source code, methods, trade secrets and confidential information of plaintiff;
b) Breach
of contract;
c)Violation of confidentiality provisions running
to the benefit of plaintiff;
d) Inducing
and encouraging others to violate confidentiality provisions;
e)Contribution of protected source code and
methods for incorporation into one or more Linux software releases, intended
for transfer of ownership to the general public;
f) Use of deceptive
means and practices in dealing with plaintiff with respect to its software
development efforts; and
g) Other
methods of unlawful and/or unfair competition.
185. IBM’s
unfair competition has directly and/or proximately caused significant foreseeable
and consequential harm to plaintiff in the following particulars:
a)Plaintiff’s revenue stream from UNIX licenses
for Intel-based processing platforms has decreased substantially;
b) As
Intel-based processors have now become the processing platform of choice
for a rapidly-increasing customer base of enterprise software users, plaintiff
has been deprived of the opportunity to fairly exploit its market-leading
position for UNIX on Intel-based processors, which revenue opportunity would
have been very substantial on a recurring, annual basis but for IBM’s unfairly
competitive practices;
c)Plaintiff stands at imminent risk of being
deprived of its entire stream of all UNIX licensing revenue in the foreseeably
near future;
d) Plaintiff
has been deprived of the effective ability to market and sell its new UNIX-related
improvements, including a 32-bit version of UNIX for Intel processors developed
prior to Project Monterey, and its new web-based UNIX-related products, including
UNIX System V Release 6;
e)Plaintiff has been deprived of the effective
revenue licensing opportunity to transfer its existing UNIX System V Release 4 and Release 5 customer
base to UNIX System V Release 6; and
f) Plaintiff
has been deprived of the effective ability to otherwise fully and fairly
exploit UNIX’s market-leading position in enterprise software market, which
deprivation is highly significant given the inability of Microsoft Windows
to properly support large-scale enterprise applications.
186. As
a result of IBM’s unfair competition and the marketplace injury sustained
by plaintiff as set forth above, plaintiff has suffered damages in an amount
to be proven at trial, but no less than $1 billion, together with additional
damages through and after the time of trial foreseeably and consequentially
resulting from IBM’s unfair competition in an amount to be proven at the
time of trial.
188.[sic] IBM’s
unfairly competitive conduct was also intentionally and maliciously designed
to destroy plaintiff’s business livelihood and all opportunities of plaintiff
to derive value from its UNIX-based assets in the marketplace. As such,
IBM’s wrongful acts and course of conduct has created a profoundly adverse
effect on UNIX business worldwide. As such, this Court should impose an
award of punitive damages against IBM in an amount to be proven and supported
at trial.
SEVENTH CAUSE
OF ACTION
(Interference with Contract)
187 [sic]. Plaintiff
incorporates and re-alleges by reference paragraphs 1-186, [sic]above.
188.[sic] SCO
has contracts with customers around the world for licensing of SCO OpenServer
and UnixWare.
189.[sic] IBM
knew and should have known of these corporate software licensing agreements
between SCO and its customers, including the fact that such agreements contain
confidentiality provisions and provisions limiting use of the licensed object-based
code.
190.[sic] IBM,
directly and through its Linux distribution partners, has intentionally and
without justification induced SCO’s customers and licensees to breach their
corporate licensing agreements, including but not limited to, inducing the
customers to reverse engineer, decompile, translate, create derivative works,
modify or otherwise use the UNIX software in ways in violation of the license
agreements. These customers include Sherwin Williams, Auto Zone, among others.
191.[sic] IBM’s
tortious interference has directly and/or proximately caused significant
foreseeable damages to SCO, including a substantial loss of revenues.
192[sic]. 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 its UNIX-based assets in the marketplace. As such, this Court
should impose an award of punitive damages against IBM in an amount to be
proven and supported at trial.
EIGHTH CAUSE
OF ACTION
(Interference with Contract)
193.[sic]
Plaintiff
incorporates and re-alleges paragraphs No. 1-192,[sic] above.
194.[sic] Through an Asset Purchase Agreement dated September 19, 1995, as amended ("Asset Purchase Agreement," attached hereto with amendments as Exhibit "V") wherein Novell received 6.1 million shares of SCO common stock, valued at the time at over $100 million in consideration, SCO, through its predecessor in interest, acquired from Novell all right, title and interest in and to the UNIX and UnixWare business, operating system, source code, and all copyrights related thereto, as well as all claims arising after the closing date against any parties relating to any right, property, or asset included in the business.
195.[sic] Schedule 1.1(a) to the Asset Purchase Agreement provides that SCO, through its predecessor in interest, acquired from Novell:
I. All rights and ownership of UNIX and UnixWare, including but not limited to all versions of UNIX and UnixWare and copies of UNIX and UnixWare (including revisions and updates in process), and all technical, design, development, installation, operation and maintenance information concerning UNIX and UnixWare, including source code, source documentation, source listings and annotations, appropriate engineering notebooks, test data and results, as well as all reference manuals and support materials normally distributed by [Novell] to end-users and potential end-users in connection with the distribution of UNIX and UnixWare . . .
II. All of [Novell's] claims arising after the Closing Date against any parties relating to any right, property or asset included in the Business.
196. In Amendment No. 2 to the Asset Purchase Agreement, Novell and SCO made clear that SCO owned all "copyrights and trademarks owned by Novell as of the date of the [Asset Purchase Agreement] required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies," and that Novell would not longer be liable should any third party bring a claim against SCO "pertaining to said copyrights and trademarks." (Exh. V, Amendment No. 2 to the Asset Purchase Agreement dated October 16, 1996 at I).
197.
IBM is well aware of the terms of the Asset Purchase Agreement and the obligations Novell owes to SCO pursuant to the Asset Purchase Agreement. Indeed, IBM expressly acknowledged the existence of the Asset Purchase Agreement when it executed Amendment X, attached hereto as Exhibit E.
198.[sic] After suit against IBM was filed, and more than seven years after the Asset Purchase Agreement was executed by Novell, IBM intentionally and improperly interfered with the Asset Purchase Agreement.
199.[sic] Specifically, commencing on or about May 2003, Novell began falsely claiming that Novell, not SCO, owned the copyrights relating to UNIX System V. On information and belief, IBM had induced or otherwise caused Novell to take the position that Novell owned the copyrights -- a position that is flatly contradicted by the Asset Purchase Agreement. Since that time, Novell has improperly registered the same copyrights that it sold to SCO and that SCO had previously registered.
200.[sic] In addition, IBM intentionally and improperly interfered with the Asset Purchase Agreement by inducing or otherwise causing Novell to violate the Asset Purchase Agreement by claiming Novell could waive and was waiving breaches of license agreements by various licensees, including IBM. Specifically, with the IBM Termination Date looming only days away, Novell wrote to SCO claiming that either SCO must waive its right to terminate IBM's license based upon IBM's numerous breaches thereof or else Novell would purportedly waive SCO's right to terminate the license and otherwise excuse IBM's numerous breaches of the license agreements. 201.[sic] Again, Novell's position, improperly encouraged and induced by IBM, is flatly contrary to the terms of the Asset Purchase Agreement.
202.[sic] Under the Asset Purchase Agreement, Novell merely retained an interest in receiving future royalties from System V licensees. SCO, conversely, obtained "all of Sellers' right, title and interest in and to the assets and properties of the seller relating to the Business (collectively the "Assets") identified on Schedule 1.1(a) hereto." The Assets identified on Schedule 1.1(a) include "all rights and ownership of Unix and UnixWare," including source code, software and sublicensing agreements and "all claims against any parties relating to any right or asset included in the business."
203.[sic] Thus, SCO acquired all of Novell's right, title and interest: (a) to the AT&T software and sublicensing agreements, including the IBM Related Agreements and Sequent Agreements, and (b) to all claims against any parties.
204.[sic] As a beneficiary of the royalties, Novell can modify or waive the royalty amounts due under a license agreement. However, at IBM's improper urging and inducement, Novell now claims that it can amend, modify or waive any and all terms of the software and sublicensing agreements. Thus, according to Novell's position prompted by IBM, if a licensing such as IBM is egregiously breaching its agreement and thereby destroying the value of System V, Novell claims that it can waive any such breach of the agreement. Such position, of course, is unfounded and preposterous; otherwise, the over $100 million dollars paid for the software and sublicensing agreements was for naught if Novell retained all rights to waive any breach by a licensee. Of course, Novell could not sell all right, title and interest to the AT&T software and sublicensing agreements and the rights to all claims against third parties, only to have Novell also claim it can wiave those rights. While Novell may be able to modify or waive the royalties to which Novell was entitled, Novell cannot waive rights it clearly unequivocally sold to SCO (i.e. the software and sublicensing agreements, including all the restrictive covenants, and all claims against any parties relating to those agreements.) Novell nonetheless has attempted to do so at IBM's improper direction.
205. Since improperly inducing Novell to breach the Asset Purchase Agreement by falsely claiming copyright ownership of System V (and subsequently registering those copyrights after SCO had registered them) and since improperly inducing Novell to attempt to breach the Asset Purchase Agreement by purporting to waive SCO's rights under the Asset Purchase Agreement, IBM has contributed $50 million dollars to Novell so that Novell can complete the purchase of SuSE, the largest Linux distributor in Europe.
206. IBM's tortious interference has directly and/or proximately caused significant forseeable damages to SCO.
207. 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 its Unix based assets in the marketplace. As such, this Court should impose and award punitive damages against IBM in an amount to be proved and supported at trial.
NINTH CAUSE OF ACTION
(Interference with Business Relationships)
208. Plaintiff incorporates and re-alleges by reference paragraphs 1-207, above.
209. SCO had existing or potential economic relationships with a variety of companies in the computer industry, including but not limited to Hewlett Packard.
210. IBM has intentionally interfered with plaintiff's existing or potential economic relations. For example, at Linux World in January, 2003 IBM representatives contacted various companies with whom SCO had existing or potential economic relations. These IBM representatives said that IBM was discontinuing doing business with SCO and that these other companies, some of whom are business partners with IBM, also should discontinue doing business with SCO.
211. IBM, as the world's largest information technology company, as well as the world's largest business and technology services provider ($36 billion), and the world's largest IT financier ($35 billion in assets), has considerable clout with these companies that it told to stop doing business with SCO.
212. IBM's intentional interference was for an improper purpose and/or by improper means.
213. IBM's intentional interference has directly and/or proximately caused significant forseeable damages to SCO.
214. IBM's tortious conduct was also intentionally and maliciously designed to destroy plaintiff's business livelihood. As such, this Court should impose an award of punitive damages against IBM in an amount to be proved and supported at trial.
WHEREFORE, having fully set forth its complaint, plaintiff prays for relief from this Court as follows:
1. Under the First Cause of Action, damages for breach of the IBM Softare Agreement in an amount not less than $1 billion, together with additional damages through and after the time of trial forseeably and consequently resulting from IBM's breach, in an amount to be proven at the time of trial; and together with a permanent injunction requiring IBM to return or destroy all source code and binary copies of the Software Products and/or prohibiting IBM from further contributions of the protected Software Products into open source; and for restitution in an amount measured by the benefits conferred upon IBM by its ongoing improper use of the Software Products, including the full amount IBM receives as a result of its ongoing sales of AIX, including software, services and hardware; and for attorneys fees and costs;
2. Under the Second Cause of Action, damages for breach of the IBM Sublicensing Agreement in an amount not less than $1 billion, together with additional damages through and after the time of trial forseeably and consequently resulting from IBM's breach, in an amount to be proven at the time of trial; and together with a permanent injunction requiring IBM to return or destroy all source code and binary copies of the Software Products and/or prohibiting IBM from further contributions of the protected Software Products into open source; and for restitution in an amount measured by the benefits conferred upon IBM by its ongoing improper use of the Software Products, including the full amount IBM receives as a result of its ongoing sales of AIX, including software, services and hardware, and for attorneys fees and costs;
3. Under the Third Cause of Action, damages for breach of the Sequent Software Agreement in an amount not less than $1 billion, together with additional damages through and after the time of trial forseeably and consequentially resulting from IBM's breach, in an amount to be proven at the time of trial; and together with a permanent injunction requiring IBM to return or destroy all source code and binary copies of the Software Products and/or prohibiting IBM from further contributions of the protected Software Products into open source; and for restitution in an amount measured by the benefits conferred upon IBM by its ongoing improper use of the Software Products, including the full amount IBM receives as a result of its ongoing sales of Dynix/ptx, including software, services and hardware; and for attorneys fees and costs;
4. Under the Fourth Cause of Action, damages for breach of the Sequent Sublicensing Agreement in an amount not less than $1 billion, together with additional damages through and after the time of trial forseeably and consequentially resulting from IBM's breach, in an amount to be proven at the time of trial; and together with a permanent injunction requiring IBM to return or destroy all source code and binary copies of the Software Products and/or prohibiting IBM from further contributions of the protected Software Products into open source; and for restitution in an amount measured by the benefits conferred upon IBM by its ongoing, improper use of the Software Products, including the full amount IBM receives as a result of its ongoing sales of Dynix/ptx, including software, services and hardware; and for attorneys fees and costs;
5. Under the Fifth Cause of Action, injunctive relief pursuant to 17 U.S.C. § 502 and SCO's actual damages and IBM's profits as a result of the infringing acts pursuant to 17 U.S.C. § 504 (a), statutory damages to the extent applicable pursuant to 17 U.S.C. § 504 (b) and enhanced damages, together with attorneys' fees and costs pursuant to 17 U.S.C. § 505
6. Under Sixth Cause of Action, for damages in an amount not less than $1 billion, for unfair competition arising from common law, and damages for violations thereof, together with additional damages through and after the time of trial;
7. Under the Seventh through Ninth Causes of Action, for damages in an amount to be proven at trial for tortious interference, together with additional damages through and after the time of trial;
8. For a permanent injunction to prohibit IBM from further contributions of the protected Software Products into open source;
9. For punitive damages under the Sixth through Ninth Causes of Action for IBM's malicious and willful conduct, in an amount to be proven at trial;
10. For attorneys' fees and costs as provided by statute and/or by contract in an amount to be proven at trial; together with pre- and post-judgment interest and;
11. For all other legal and equitable relief deemed just and proper by this Court.
DATED this
___ day of June, 2003.
By: ________________________________________
HATCH,
JAMES & DODGE
Brent O. Hatch
Mark F. James
BOIES, SCHILLER & FLEXNER
David
Boies
Stephen
N. Zack
Mark
J. Heise
Attorneys
for The SCO Group, Inc.
Plaintiff’s address:
[address]
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