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IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Wednesday, March 31 2004 @ 04:35 AM EST

IBM has registered nine new copyrights, including IBM Linux Kernel Support for JFS. They registered on February 2, 2004. They show up in a list in the new Second Amended Counterclaims in IBM's Eighth Counterclaim, beginning with paragraph 154. This obviously gives them the right to sue for damages. You'll enjoy reading about IBM's knockout blow here.

If you wish to compare the prior version, it is here. The PDF of this document is here. This is still a rough draft, and normally I wouldn't put it up until it was finished, but the copyright news is significant enough that it seemed worthwhile showing them to you immediately. I have marked all the significantly new material in red text. I'm working mighty fast, and I have to stop now to get some paid work done by noon, but then I'll come back and finish. Or likely some of you may wish to finish it and make a note of further changes. A special thanks to jkondis for the text version to work from.

********************************************************

SNELL & WILMER LLP
Alan L. Sullivan (3152)
Todd M. Shaughnessy (6651)
[address, phone, fax]

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
[address, phone]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH

THE SCO GROUP, INC., a Delaware
corporation,

Plaintiff/Counterclaim-Defendant,

-against-

INTERNATIONAL BUSINESS
MACHINES CORPORATION, a New York
corporation,

Defendant/Counterclaim-Plaintiff,

COUNTERCLAIM-PLAINTIFF
IBM'S SECOND AMENDED
COUNTERCLAIMS
AGAINST SCO

JURY TRIAL DEMANDED

Civil No. 2:03CV-0294 DAK

Honorable Dale A. Kimball

Magistrate Judge Brooke C. Wells

For its counterclaims herein, counterclaim-plaintiff International Business Machines Corporation ("IBM"), by and through its attorneys, upon personal knowledge as to its own actions and upon information and belief as to the actions of counterclaim-defendant The SCO Group, Inc. ("SCO"), avers as follows:

NATURE OF COUNTERCLAIMS

1. These counterclaims arise from SCO's efforts wrongly to assert proprietary rights over important, widely-used technology and to impede the use of that technology by the open-source community. SCO has misused, and is misusing, its purported rights to the Unix operating system developed originally by Bell Laboratories, then a research and development arm of AT&T Corp., to threaten destruction of the competing operating systems known as AIX, Dynix and Linux, and to extract windfall profits for its unjust enrichment.

2. IBM's counterclaims also arise from SCO's infringement of IBM copyrights and patents. Although SCO purports to respect the intellectual property rights of others -- and has instituted litigation against IBM for alleged failures with respect to SCO's purported rights -- SCO has infringed and is infringing a number of IBM copyrights and patents.

JURISDICTION AND VENUE

3. This Court has jurisdiction over IBM's counterclaims pursuant to 28 U.S.C. §§ 1331, 1332(a)(l), 1338(a) and (b), 1367, 2201(a) and 2202 and 15 U.S.C. § 1125(a)(l).

4. The Court has diversity and supplemental jurisdiction over IBM's state law claims. The parties have complete diversity of citizenship, and the amount in controversy exceeds $75,000, exclusive of interest and costs. IBM's Lanham Act, copyright and patent claims arise under federal law.

5. Venue is proper in this district, with respect to IBM's counterclaims, pursuant to 28 U.S.C. §§ 1391(b), 1391(c), and 1400(a) and (b).

PARTIES

6. Counterclaim-plaintiff IBM is a New York corporation with its principal place of business in the state of New York.

7. Counterclaim-defendant SCO is a Delaware corporation with its principal place of business in Utah County, Utah.

BACKGROUND

A. Unix

8. Unix is a name used to characterize a family of operating systems that share common characteristics and meet certain well-publicized "UNIX" standards. The earliest Unix operating system was built by software engineers at Bell Laboratories, the research division of AT&T.

9. Over the years, AT&T Technologies, Inc., a wholly owned subsidiary of AT&T, and its related companies licensed Unix operating systems, such as the version known as "UNIX System V", for widespread enterprise use. AT&T's Unix software has been licensed to many thousands of persons or entities.

10. In 1993, AT&T sold its Unix assets -- then held by its subsidiary, Unix System Laboratories, Inc. ("USL") -- to Novell, Inc. ("Novell"). In 1995, Novell sold some, but not all, of its Unix assets to The Santa Cruz Operation, Inc., now known as Tarantella, Inc. ("Original SCO"), which is not affiliated with counterclaim-defendant SCO.

11. Counterclaim-defendant SCO played no role in the development of Unix. But it purports to have acquired Original SCO's rights to Unix in 2001. Based upon the rights it purports to have acquired from Original SCO, SCO has undertaken the scheme described herein.

B. IBM and Unix

12. In the mid-1980s, IBM acquired broad rights to use Unix System V software pursuant to a series of agreements with AT&T Technologies. These agreements, referred to as the "AT&T Agreements", include the Software Agreement (Agreement Number SOFT-00015) dated February 1, 1985, the Sublicensing Agreement (Agreement Number SUB-00015A) dated February 1, 1985, the Substitution Agreement (Agreement Number XFER-000l5B) dated February 1, 1985, the letter agreement dated February 1, 1985, and the Software Agreement Supplement 170, as amended by a letter agreement dated on or about January 25, 1989. Copies of these agreements are attached hereto as Exhibits A - F, respectively.

13. In connection with the proper exercise of these and other rights previously obtained by IBM with respect to Unix, IBM began development of its own version of a Unix operating system, called AIX. Over the last two decades, IBM has expended tremendous resources on developing AIX, creating millions of lines of original code, incorporating it into its product lines and licensing the technology to thousands of customers worldwide. IBM continues to do so today.

14. On October 17, 1996, after Novell and Original SCO acquired AT&T's rights to UNIX, IBM obtained additional rights with respect to UNIX System V software. Pursuant to an agreement known as Amendment X, entered into by IBM, Novell and Original SCO, IBM acquired, for example, the "irrevocable, fully paid-up, perpetual right to exercise all of its rights" under the IBM Agreements. A copy of this agreement is attached hereto as Exhibit G.

15. Like IBM, Sequent Computer Systems, Inc. ("Sequent") acquired broad rights to use AT&T's UNIX System V software pursuant to a series of agreements with AT&T Technologies in the mid-1980s. These agreements, referred to as the "Sequent Agreements", include the Software Agreement (Agreement Number SOFT-000321) dated April 18, 1985, the Sublicensing Agreement (Agreement Number SUB-000321A) dated January 28, 1986, and the Substitution Agreement (Agreement Number XFER-000321B) dated January 28, 1986. Copies of these agreements are attached hereto as Exhibits H-J, respectively.

16. Sequent also developed a version of a Unix operating system known as Dynix in connection with the proper exercise of its rights under these and other agreements with respect to UNIX System V. IBM acquired Sequent by merger in 1999.

C. Linux

17. Linux is an operating system that stems from a rich history of collaborative development. Linux is a dynamic and versatile operating system and is, for many, the operating system of choice.

18. The development of Linux began when an undergraduate student at the University of Helsinki, by the name of Linus Torvalds, set out to create a new, free operating system. In 1991, Linus Torvalds began developing the Linux kernel, the core of the operating system, and posting news of his project to internet newsgroups, along with a call for volunteers to assist in his efforts.

19. With the internet providing for a distributed collaboration, other programmers joined to create code making up the kernel. Linus Torvalds directed the collaboration to a version 1.0 release of the Linux kernel in 1994.

20. In the years that followed, thousands of developers, including developers at IBM, contributed to the further development of Linux. Version 2.4 of the Linux kernel was released in 2001. IBM owns valid copyrights in its contributions to Linux, as illustrated below.

21. The first commercial distribution of Linux was introduced in 1994 by Red Hat. Thereafter, other distributors, including SCO, introduced a number of commercial Linux products, which typically comprise the Linux kernel, the applications that the kernel runs (which, with the kernel, comprise a complete operating system) and whatever else the distributor chooses to combine into an easily installable product.

D. Open-Source Software and the GPL

22. Linux is open-source software. Open-source software is free in the sense that it is publicly available, royalty free, and users have the freedom to run, copy, distribute, study, adapt, and improve the software.

23. Whereas traditional software licenses often reflect legal limitations restricting the use and reproduction of original works, the open-source community has taken a different approach to licensing. The open-source community, including SCO, resolved to license Linux so as to keep the source code publicly available. Due to the open-source nature of Linux, anyone can freely download Linux and many Linux applications and modify and re-distribute them with few restrictions.

24. There are a variety of open-source licenses, but the most popular is the GNU General Public License (the "GPL"), a copy of which is attached hereto as Exhibit K. The Linux kernel, and significant portions of the larger Linux operating system, are distributed under the GPL.

25. In fact, one of the most important decisions Linus Torvalds made was to develop the Linux kernel under the GPL and keep the source code freely distributable so others could build upon, modify, and develop programs for the operating system.

26. Whereas the licenses for most software are programs designed to limit or restrict a licensee's freedom to share and modify it, the GPL is intended to guarantee a licensee's freedom to share and modify open-source software. The GPL applies to any program whose authors commit to using it.

27. The GPL is designed to make sure that a licensee has the freedom to distribute copies of open-source software, to receive source code or to get it if the licensee so desires, to modify the software or use pieces of it in new free programs, and to know the licensee can do these things.

28. The Linux kernel is subject to the GPL as it is comprised of programs and other works that contain notices placed by contributing copyright holders permitting distribution under the terms of the GPL. The Linux developers' public agreement to apply GPL terms expresses in a binding legal form the conscious public covenant that defines the open-source community -- a covenant that SCO itself supported as a Linux company for many years.

29. SCO accepted the terms of the GPL by modifying and distributing Linux products. By distributing Linux products under the GPL, SCO agreed, among other things, not to assert -- indeed, it is prohibited from asserting -- certain proprietary rights over any programs distributed by SCO under the terms of the GPL. SCO also agreed not to restrict further distribution of any programs distributed by SCO under the terms of the GPL.

E. SCO's Business

30. SCO was founded as Caldera, Inc. in 1994, approximately 25 years after the beginning of the development of Unix and three years after Linus Torvalds began the development of Linux, to develop Linux-based business solutions. In 1998, Caldera, Inc. sold its assets relating to its business of developing and marketing Linux to Caldera Systems, Inc., a newly formed corporation.

31. SCO began its business as a developer and distributor of the Linux operating system. By 2001, according to SCO, it led the world's largest Linux channel with more than 15,000 resellers worldwide.

32. SCO has developed and marketed software based on the Linux operating system and provided related services that enable the development, deployment and management of Linux-specialized servers and internet access devices that simplify computing. According to SCO, it was one of the first companies to tailor Linux open-source code from various sources into discrete commercial products.

33. Specifically, SCO has distributed and/or redistributed a number of Linux products, including SCO Linux server, SCO OpenLinux Server, and SCO OpenLinux Workstation. SCO has also distributed SCO Volution Manager, a web-based management solution system for managing and maintaining established versions of Linux (as well as Unix operating systems). Although SCO purported to suspend its Linux distribution after the commencement of this action, SCO has continued to make Linux source code available for download through its website.

34. The viability of SCO's product offerings has depended in large measure upon the efforts of the open-source community in enhancing products and making them compatible for use across multiple software and hardware platforms. Indeed, SCO incorporated certain code licensed pursuant to the GPL into its proprietary Unix products. SCO has also relied on independent developers in the open-source community, such as Linus Torvalds, in order to release upgrades of SCO's Linux-based products.

35. In addition to distributing Linux products, SCO facilitated the adoption of Linux by providing education programs designed to help its customers to develop, deploy and administer Linux systems. Furthermore, SCO joined with other Linux vendors in UnitedLinux, an initiative to streamline Linux development and certification around a global, uniform distribution of Linux for business.

36. On May 7, 2001, Caldera Systems was merged into Caldera International, Inc. (described below), which changed its name to The SCO Group, Inc. in May 2003.

F. SCO's Open-Source Activities

37. Until it undertook the scheme described herein, SCO supported the open-source community. According to SCO, it fully embraced the open-source model.

38. SCO Linux products encompass a range of software that uses a number of different licensing schemes, including open-source licenses and, in particular, the GPL. Components of SCO's Linux products (such as OpenLinux), including the Linux kernel, have been developed and made available for licensing under the GPL and similar licenses, which generally allow any person or organization to copy, modify and distribute the software, without royalty, in any form, including source code.

39. Due to the open-source nature of many of SCO's software products and the licenses under which it has developed and distributed them, SCO's collection of trademarks constitutes its most important intellectual property.

40. At least until it undertook the scheme described herein, SCO contributed tools and technology to the open-source community. For instance, SCO incorporated open- source components in its product offerings to the betterment of its products, and gave away CD-ROMs containing its Linux operating system at trade shows and allowed it to be freely downloaded over the internet to encourage interest.

41. In addition, SCO fostered, and regularly contributed to, multiple open-source development projects in order to enhance the capability of SCO's products and services. In fact, SCO's business model depended upon incorporating contributions from the open-source community into products that it open sourced.

42. SCO also fostered and supported the development of additional open-source and Linux enhancements through the Open Source Development Lab and through participation as a key member of many industry standard and open-source initiatives.

G. IBM and Linux

43. IBM is a participant in the open-source movement and has made a substantial investment in Linux business efforts over the last 5 years. IBM participates in a broad range of Linux projects that are important to the company and contribute to the open-source community.

44. Today, IBM has many Linux-related offerings: mainframes and servers that run Linux; memory solutions for Linux environments; a broad range of software offerings; services that include deployment of Linux-based e-business environments, migration of database applications and data to Linux systems, support for Linux-based cluster computing, server consolidation, and a 24-hour technical engineering support line. IBM has created a Linux Center of Competency that offers Linux training and support, applications testing, technical advice and a hands-on environment in which to evaluate Linux and Linux-based applications.

45. Like thousands of other developers, IBM has properly contributed source code to Linux under the GPL. In fact, SCO has included IBM contributions to Linux in Linux products that SCO has distributed under the GPL. IBM is entitled to the protections of the GPL with respect to the IBM contributions, as well as any other contributions included in SCO's Linux distributions, of which IBM is a recipient.

46. IBM also uses and reproduces Linux itself, both in developing and providing hardware, software and services, and for other, internal business purposes.

47. IBM's employees use and reproduce Linux in designing, testing and implementing hardware, software and consulting products for the company's internal use, for sale to its customers and for contribution to the open source community. IBM's engineers, developers, and consultants are trained to design, operate and implement products and systems that work with Linux. IBM personnel use and reproduce Linux in the course of this training.

48. Many IBM employees already use and reproduce Linux as their platform for day-to-day business computing, such as word processing, spreadsheets and e-mail.

H. Failure of SCO's Business

49. Although it completed an initial public offering, SCO has failed to establish a successful business around Linux. SCO's Linux business has never generated a profit. In fact, the company as a whole did not experience a profitable quarter until after it abandoned its Linux business and undertook its present scheme to extract windfall profits from Unix technology that SCO played no role in developing.

50. In an attempt to revive its faltering Linux business, SCO acquired rights to Unix operating systems originally developed by Bell Laboratories and undertook the unification of Unix and Linux operating systems. On May 7, 2001, Caldera Systems was merged into Caldera International, Inc., a holding company formed to acquire the Server Software and Professional Services divisions of Original SCO, including Original SCO's rights to the Unix assets it acquired from Novell and the Unix variant developed by Original SCO.

51. Following its acquisition of Original SCO's Unix assets, SCO described its business plan as being to integrate its Linux-based products and services with its Unix-based products and services as a way of encouraging businesses to adopt the open-source, Linux-based operating systems.

52. In pursuit of this strategy, SCO designed SCO Linux to permit existing Unix-based users to migrate to Linux. In addition, SCO marketed and sold a number of Unix products, including UnixWare, SCO OpenServer, Reliant HA, and Merge, and SCO's Global Professional Services assisted customers in developing and deploying unified Unix and Linux solutions through consulting and custom engineering services.

53. Like SCO's original Linux business, however, this enterprise failed. SCO has not been able to operate a successful, legitimate business concerning Linux and/or Unix. With apparently no other prospects, SCO shifted its business model yet again -- this time to litigation and threats of litigation, as is described below.

I. SCO's Scheme

54. SCO devised a scheme to profit from the Unix assets that it acquired from Original SCO, though those assets were in no way developed by SCO. Although most, if not all, of the AT&T Unix technology that SCO purports to own is generally known, available without restriction to the general public or readily ascertainable by proper means, SCO undertook to create fear, uncertainty and doubt in the marketplace in regard to SCO's rights in and to that technology.

55. Recognizing that there is little value in its Unix rights, SCO did not limit its scheme to that technology. Rather, SCO devised and executed a plan to create the false perception that SCO holds rights to Unix that permit it to control not only all Unix technology, but also Linux -- including those aspects generated through the independent hard work and creativity of thousands of other developers and long distributed by SCO itself under the GPL.

56. SCO undertook to carry out its scheme by, among other things, (a) bringing baseless legal claims against IBM and threatening to sue other companies and individuals, (b) conducting a far-reaching publicity campaign to create the false and/or unsubstantiated impression that SCO has rights to Unix and Linux that it does not have and that IBM and others have violated SCO's rights and (c) otherwise seeking to condition the market to believe that SCO has rights to Unix and Linux that it does not have and cannot properly enforce.

J. SCO's Lawsuit and Threats

57. On March 7, 2003, without any prior notice or warning that would have allowed IBM to understand SCO's claims and respond to them, SCO sued IBM alleging a host of meritless claims. In its first Complaint, SCO principally alleged that IBM had misappropriated SCO's trade secrets in UNIX System V. SCO also alleged that IBM had breached its contractual obligations to SCO by, among other things, incorporating and inducing others to incorporate SCO's intellectual property into Linux, and that that IBM had competed unfairly and interfered with SCO's contracts with others.

58. SCO submitted an Amended Complaint on July 22, 2003 and a Second Amended Complaint on February 27, 2004.

59. In its succession of complaints, SCO has asserted legal theories that are meritless , such as that SCO has ownership rights with respect to all of the code in AIX and Dynix . SCO has also sought relief to which it is plainly not entitled, such as a permanent injunction terminating IBM's ability to possess and use the software products it licensed from AT&T Technologies, Inc., notwithstanding the fact that those rights are expressly "irrevocable" and "perpetual".

60. SCO further persisted in maintaining for nearly a year the unsound claim that IBM had misappropriated its trade secrets. Yet when pressed to identify a single trade secret that IBM allegedly misappropriated, SCO could not, even after being ordered to do so by the Court. SCO finally (and properly) abandoned this claim, upon which SCO's entire lawsuit was initially premised, in its Second Amended Complaint.

K. SCO's Campaign of False Publicity to Disparage AIX, Dynix and Linux

61. Following the commencement of its lawsuit against IBM, SCO continued its campaign of falsehoods by further misrepresenting to the market the interplay of UNIX, AIX, Dynix and Linux and SCO's and IBM's rights to these products.

62. SCO has repeatedly made false public statements to the effect that it has the right and authority to revoke, and has effectively revoked, IBM's right to use AIX, IBM's version of Unix. For example, on May 12, 2003, Chris Sontag, a Senior Vice President of SCO, stated publicly, SCO has "the right to revoke the AIX license", and on June 16, 2003, SCO announced publicly that it had "terminated IBM's right to use or distribute any software product that is a modification of or based on Unix System V source code". Indeed, in an interview given by SCO CEO Darl McBride to Peter Williams of vnunet.com on June 25, 2003, SCO falsely represented that its contractual rights to "pull" IBM's contract are "bullet-proof". SCO has made similarly false statements relating to Dynix.

63. In addition to purporting to terminate IBM's rights to use AIX, SCO has also disparaged AIX as "unauthorized". In a press release dated June 16, 2003, SCO's counsel stated that "Today, AIX is an unauthorized derivative of the Unix System operating system source code and its users are, as of this date, using AIX without a valid basis to do so". In the same press release, Darl McBride, SCO's Chief Executive Officer, stated that "IBM no longer has the authority to sell or distribute AIX and customers no longer have the right to use AIX software". SCO has made similarly false and disparaging statements relating to Dynix.

64. SCO's false and misleading statements have not been limited to AIX. In flat contradiction of its allegations in its Second Amended Complaint (i.e., that this case is not about the relative merits of proprietary versus open-source software), SCO has now falsely stated, in effect, it owns and is entitled to collect royalties regarding Linux. For example, on July 21, 2003, McBride stated, on behalf of SCO, Linux infringes SCO's rights and, as "a viable alternative to legal enforcement" SCO is prepared to offer a license to SCO's UNIX products that would, SCO says, permit lawful use of Linux.

65. SCO has in fact commenced selling such "intellectual property licenses", which it falsely claims are necessary for the use of Linux. SCO has publicly touted its success in getting Linux users to sign these licenses with SCO in order to bolster its meritless claims that SCO possesses rights to Linux.

66. SCO's campaign has not been limited to press releases and public interviews. SCO has also propagated falsehoods about its and IBM's rights in non-public meetings with analysts. SCO has solicited and participated in these meetings to misuse analysts to achieve wider dissemination of SCO's misleading message about UNIX, AIX and Linux and to damage IBM and the open-source movement. In a luncheon hosted by Deutsche Bank analyst Brian Skiba, on or about July 22, 2003, for example, SCO falsely stated that IBM transferred the NUMA code from Sequent to Linux without any legal basis to do so and that IBM's actions were giving rise to about $1 billion in damages per week. In an interview in June 2003 with Client Server News, SCO misrepresented to analysts that IBM has improperly released "truckloads" of code into the open-source community.

67. SCO's false and misleading statements have also damaged the reputation and prospects of the entire open-source community. SCO's misconduct undermines the substantial public interest in the provision of software that is reliable, inexpensive, and accessible by the general public.

L. SCO's Copyright Threats and Litigation Against IBM and Others

68. In furtherance of its scheme to disparage and falsely lay claim to Linux, SCO has made open threats to Linux users that SCO intends to pursue litigation against them, and has recently filed baseless copyright infringement claims against IBM and another alleged Linux user.

69. In May 2003, SCO first sent letters to 1500 of the world's largest corporations, including IBM , threatening litigation. In its letters, an example of which is attached hereto as Exhibit L, SCO states, "We believe that Linux infringes on our Unix intellectual property and other rights". SCO further states, "We intend to aggressively protect and enforce these rights" against not only the companies involved with "the Linux development process" but also "the end user" companies using any Linux technology.

70. SCO later made clear that it intends to bring legal action against Linux end-users. For example, in a press conference on July 21, 2003, SCO stated that purchasing a license from SCO was the "alternative to legal enforcement against Linux end-users".

71. On November 18, 2003, during a teleconference sponsored by SCO, SCO's counsel said that it "will be looking to identify a defendant" in "the near term" and such defendant will be "a significant user that has not paid license fees and is in fact using the proprietary and copyrighted material". During the same call, SCO Chief Executive, Darl McBride was asked if the 1500 companies threatened earlier were the same group of companies that SCO would pursue. McBride responded: "We will start there. That's not going to be the ending point, but clearly large customers that have, that are using a lot of Linux machines inside of their environment would be the starting point for us."

72. Although its initial complaints against IBM did not include a claim for copyright infringement, SCO stated publicly after it filed its suit that IBM had infringed SCO's copyrights, and threatened to sue IBM for copyright infringement with respect to Linux. For example, at its 2003 SCO Forum conference, SCO represented to attendees, including press and financial analysts, that Linux is an unauthorized derivative of UNIX, that IBM had infringed its rights in Linux and that SCO was entitled to damages and injunctive relief against IBM.

73. At the December 5, 2003 hearing concerning discovery issues, SCO further represented to the Court that SCO would be filing a copyright infringement action against IBM "within the coming few days or no less than a week."

74. After making public its intent to sue IBM for copyright infringement on December 5, SCO also stepped up its threats directed at other Linux users.

75. On December 22, 2003, SCO announced in a press release that it had "commenced providing notification to selected Fortune 1000 Linux end users outlining. . . violations of SCO's copyrights contained in Linux". In connection with its December 22 press release, SCO released a letter (attached hereto as Exhibit M) dated December 19, 2003 that it sent to Linux users. In that letter, SCO wrote that "a portion of our copyrighted code . . . has been incorporated into Linux without our authorization" and that "use of the Linux operating system in a commercial setting violates our rights under the United States Copyright Act".

76. In remarks delivered at Harvard Law School on February 2, 2004, SCO CEO McBride stated that "on the copyright side and on the end user side, we'll be in a courtroom somewhere in America soon . . . " At the same event, McBride predicted that suits would be filed by mid-February, and a SCO executive, Christopher Sontag, who also attended, stated that SCO would "probably have an issue with" any entities using Linux "in a large commercial environment and getting a great deal of economic benefit of the use of some of our portions of our intellectual property."

77. Shortly thereafter, SCO moved for and obtained leave to add a copyright infringement claim against IBM. In the claim, SCO alleges that IBM has infringed, induced the infringement of, and contributed to the infringement of, numerous of the UNIX copyrights SCO claims to own, including through its activities relating to AIX, Dynix and Linux.

78. In particular, with respect to Linux, SCO alleges that "a significant amount of UNIX protected code and materials are currently found in Linux 2.4.x, 2.5.x and Linux 2.6.x releases in violation of SCO's contractual rights and copyrights" and that IBM's work, including at its Linux Technology Center, in using, reproducing and improving Linux therefore infringes, and contributes to the infringement of, SCO's UNIX copyrights.

79. SCO also recently filed suit against a Linux user, alleging that the use of Linux infringes copyrights SCO purports to hold to UNIX.

80. SCO' s complaint in that suit asserts that "Linux has been transformed from a non-commercial operating system into a powerful general enterprise operating system for which, as stated in its suit against IBM, SCO believes IBM is responsible.

81. SCO further claims that "parts or all of [SCO's copyrighted material] has been copied or otherwise improperly used as the basis for creation of derivative software code included (in) one or more Linux implementations, including Linux versions 2.4 and 2.6, without the permission of SCO". Again, as stated in its suit against IBM, SCO claims that IBM is responsible for such copyrighted materials being contributed to Linux.

82. SCO' s threats and its claims against IBM and other Linux users are meritless, and are simply part and parcel of SCO's illicit scheme to get Linux users to pay SCO for unneeded licenses to Linux.

M. Novell's Exercise of Rights

83. On June 9, 2003, in response to SCO's actions, and pursuant to its obligations under Amendment X, Novell stated its belief that SCO has no right to terminate IBM's Unix license which is perpetual and irrevocable. Novell therefore exercised its retained rights to AT&T's UNIX System V to put a stop to SCO's misconduct. Under Section 4.16(b) of the Asset Purchase Agreement between Novell and Original SCO dated September 19, 1995 ("APA"), attached hereto as Exhibit N, Novell directed SCO to "waive any purported right SCO may claim to terminate IBM's [Unix] licenses enumerated in Amendment X or to revoke any rights thereunder, including any purported rights to terminate asserted in SCO's letter of March 6, 2003 to IBM". A copy of Novell's June 9, 2003 letter is attached hereto as Exhibit O.

84. When SCO failed to take the actions directed by Novell, on June 12 2003 Novell exercised its rights under Section 4.16(b) ofthe APA to waive and revoke, in SCO' stead, any purported right SCO claimed to terminate IBM' s licenses. A copy of Novell' June 12 2003 letter is attached hereto as Exhibit P.

85. Notwithstanding the fact that IBM' s rights to UNIX System V are expressly "irrevocable" and "perpetual" under Amendment X and the fact that Novell has exercised its right to waive, in any event, any contractual rights SCO claims IBM violated, SCO nevertheless purported to terminate IBM' s licenses on June 13 2003. Moreover, even assuming (contrary to fact) that IBM' s rights were terminable, at no time prior to SCO' s purported termination did SCO comply with its obligations under the IBM Agreements to identify the specific acts or omissions that SCO alleges constitute IBM' s breach, despite IBM' s demands that SCO do so.

86. Rather, SCO has continued to misrepresent that it can, or will, or has in fact revoked IBM' s right to use UNIX System V, without disclosing that IBM' s rights to UNIX System V are not terminable or that Novell has exercised its right to waive any contractual rights SCO claims IBM violated. In an interview with Information , 2003, for instance, SCO falsely stated that it has the right to revoke IBM' s license and order the destruction of every copy of AIX.

87. Novell additionally invoked its rights under Section 4.16(b) of the AP A to correct SCO's illogical and unsupported interpretation of the IBM Agreements and the Sequent Agreements upon which its breach of contract claims are based, and to explicitly waive and revoke any purported right SCO had to assert a breach based on this wrong interpretation.

88. On October 2003 Novell informed SCO by letter that its position that IBM original code contained in AIX "must be maintained as confidential and subject to use restrictions is contrary to the agreements between AT&T and IBM including Amendment X, to which Novell is a party". A copy of Novell's October 7, 2003 letter is attached hereto as Exhibit Q.

89. According to Novell, the IBM Agreements provide "a straightforward allocation of rights (1) AT&T retained ownership of its code from the Software Products ("AT&T Code ), and the Agreements' restrictions on confidentiality and use apply to the AT&T Code, whether in its original form or as incorporated in a modification or derivative work, but (2) IBM retained ownership of its own code, and the Agreements' restrictions on confidentiality and use do not apply to that code so long as it does not embody any AT&T Code. Novell concluded that any other interpretation "would defy logic as well as the intent of the parties".

90. Novell therefore directed SCO to waive any purported right to assert a breach of the IBM Agreements based on IBM' s use or disclosure of code that does not contain any of AT&T's UNIX System V code.

91. When SCO failed to follow Novell' s instruction, on October 10, 2003 Novell expressly waived and revoked any purported right of SCO's to assert a breach of the IBM Agreements based on IBM's use or disclosure of code that does not contain any UNIX System V code. A copy of Novell's October 10, 2003 letter is attached hereto as Exhibit R.

92. On February 6, 2004, Novell similarly directed SCO to waive any purported right to assert a breach of the Sequent Agreements based on IBM' s use or disclosure of code contained in Dynix that does not contain any UNIX System V code. February 6 2004 letter is attached hereto as Exhibit S.

93. In the letter, Novell reiterated that SCO' s interpretation of the Sequent Agreements, like its interpretation of IBM Agreements, was wrong and "plainly contrary to the position taken by AT&T, as author of and party to" such agreements.

94. When SCO failed to follow Novell' s instruction, on February 11 2004 Novell expressly waived any purported right of SCO's to assert a breach of the Sequent Agreements based on IBM's use or disclosure of code that does not contain any UNIX System V code. A copy of Novell's February 11, 2004 letter is attached hereto as Exhibit T.

95. Despite these proper instructions and waivers by Novell, SCO continues improperly to maintain that IBM has breached the IBM Agreements and the Sequent Agreements by contributing its original code to Linux.

96. In addition to its waivers of SCO's purported rights with respect to IBM Novell has additionally asserted publicly that it owns the copyrights for UNIX, and that SCO's registration of copyrights for UNIX was improper.

N. SCO's Refusal to Specify Its Claims

97. Rather than particularize its allegations of misconduct by IBM and others SCO has obfuscated and altered its claims to foster fear, uncertainty and doubt about its rights and the rights of others. In letters dated April 2, 2003, and May 5, 2003, attached hereto as Exhibits U and V, respectively, IBM expressly asked SCO to advise IBM as to what SCO contends IBM has done in violation of any of its agreements, and what SCO contends IBM should do to cure such violations. SCO refused. , SCO's counsel indicated, in an interview with Maureen O' Gara of LinuxGram, that it "doesnt want IBM to know what they (SCO' s substantive claims) are".

98. SCO has obfuscated its claims and has hidden its supposed evidence because the evidence does not demonstrate the breaches and violations that SCO has alleged. Moreover, key developers and influence leaders in the open-source community, including leaders of Linux kernel development, have stated publicly that they are prepared immediately to remove any allegedly offending material from the Linux kernel. Rather than permit remediation or mitigation of its alleged injuries (which are non-existent), SCO has declined to reveal the particulars of the alleged violations in order to artificially and improperly inflate the price of its stock.

99. While refusing to supply IBM with meaningful specifics regarding the alleged breaches, SCO has shown its purported evidence to analysts, journalists and others who are interested in seeing it. For example, at a forum held in Las Vegas on August 17- 2003 SCO made a false and misleading presentation concerning its claims against IBM, in which SCO purported to disclose examples of its evidence of alleged misconduct by IBM.

100. In light of SCO' s continuing refusal to provide detail regarding its claims IBM moved on October 1, 2003 to compel complete responses to IBM' s First Set of Interrogatories, and on November 6, 2003, to compel complete responses to IBM' s Second Set of Interrogatories. Even in the face of these motions, however, SCO continued to attempt to obfuscate its claims and hide its evidence.

101. IBM' s motions to compel were granted at a hearing on December 5, 2003.

102. Yet despite an Order directing SCO, among other things, to "identify and state with specificity the source code(s) that SCO is claiming form the basis of their action against IBM" by January 12 2004, SCO failed adequately to do so. In its supplemental responses purportedly submitted in compliance with the Order, SCO still failed to identify a single line of UNIX System V code that IBM allegedly misappropriated or misused.

103. In fact, finally realizing that it could no longer maintain the illusion that IBM had misappropriated its trade secrets, SCO dropped its trade secrets claim altogether. SCO continues, however, to press equally meritless contract and other claims against IBM, despite being unwilling to identify the UNIX System V code that IBM allegedly misused in violation of any agreement.

104. As a result of SCO's ongoing failure to be forthcoming regarding its claims against IBM, SCO was ordered on March 4, 2004 yet again to provide the specifics of its claims against IBM, this time by April 19, 2004.

105. In the meantime, by failing to disclose the particulars of its claims for more than a year, SCO has been able to cultivate and maintain in the marketplace fear uncertainty and doubt about its rights and the rights of others.

O. Effects of SCO' s Misconduct and State of Mind

106. As a result of the misconduct described above, SCO has not only artificially inflated its stock price and been unjustly enriched, but it has also injured IBM and more broadly, the open-source movement. SCO' s misconduct has resulted in damage to IBM' business, including its reputation and goodwill, has interfered with IBM' s prospective economic relations and has required IBM unduly to divert resources to respond to baseless allegations. SCO has injured the open-source movement, of which it was once a part, by fostering fear uncertainty and doubt about its and others' rights to use UNIX, AIX, Dynix and Linux.

107. SCO's misconduct is especially egregious because SCO has implemented its scheme with actual knowledge or in reckless disregard of the fact that SCO does not have the rights that it seeks to assert (e.g. the right to terminate IBM's irrevocable and perpetual UNIX rights). Moreover, SCO committed not to assert certain proprietary rights over or to restrict further distribution of any program distributed by SCO under the terms of the GPL.

P. SCO' s Copyright Infringement

108. As stated, IBM has made contributions of source code to Linux under the GPL, some of which are identified below. IBM owns valid copyrights in these contributions, as illustrated below, and has identified them with appropriate copyright notices.

109. Notwithstanding SCO's allegations that IBM and others have breached SCO' s intellectual property rights, SCO has infringed and is infringing IBM' s copyrights in its Linux contributions.

110. IBM granted SCO and others a non-exclusive license to these copyrighted contributions on the terms set out in the GPL and only on the terms set out in the GPL. SCO breached its obligations under the GPL, however, and therefore its rights under the GPL terminated.

111. SCO has infringed and is infringing IBM' s copyrights by copying, modifying, sublicensing and/or distributing Linux products including IBM' s copyrighted contributions after its rights under the GPL terminated. SCO has taken copyrighted source code made available by IBM under the GPL, included that code in SCO's Linux products, and copied modified, sublicensed and/or distributed those products other than as permitted under the GPL.

Q. SCO's Patent Infringement

112. In addition to infringing IBM' s copyrights, SCO is engaged in pervasive acts of infringement of no fewer than three of IBM' s patents, by making, using, selling and/or offering to sell a variety of products, including but not limited to: "UnixWare , a UNIX operating system for Intel and AMD processor-based computer systems; "Open Server , an operating system platform; and "Reliant HA" clustering" software that permits interconnection of multiple servers to achieve redundancy.

FIRST COUNTERCLAIM

Breach of Contract

113. IBM repeats and realleges the averments in paragraphs 1 through 112, with the same force and effect as though they were set forth fully herein.

114. SCO is licensor and IBM licensee of the right to use and sublicense UNIX System V software, as specified in the AT&T Agreements, Amendment X, the Sequent Agreements and other similar agreements, all of which are valid contracts.

115. IBM has performed all its duties and obligations under the AT&T Agreements, Amendment X, the Sequent Agreements and other similar agreements.

116. SCO has breached its express duties and obligations under the AT&T Agreements, Amendment X, the Sequent Agreements and other similar agreements by, among other things, purporting to terminate IBM's irrevocable and perpetual UNIX rights and/or refusing to provide IBM adequate notice and opportunity to cure its alleged misconduct.

117. SCO has also breached the implied covenant of good faith and fair dealing under the AT&T Agreements, Amendment X, the Sequent Agreements and other similar agreements by affirmatively seeking to deprive IBM of the benefits to which it is entitled under those contracts through numerous acts of bad faith, including, among other things, making false and misleading statements to the public about SCO's and IBM's rights under the same.

118. IBM has suffered damages from SCO's breaches of contract in an amount to be determined at trial.

SECOND COUNTERCLAIM

Lanham Act Violation

119. IBM repeats and realleges the averments in paragraphs 1 through 118, with the same force and effect as though they were set forth fully herein.

120. IBM sells and distributes AIX and Linux-related products and services in interstate commerce, and IBM sold and distributed Dynix in interstate commerce.

121. SCO has made material false representations regarding AIX, Dynix and IBM's Linux-related products and services, which affect a customer's decision whether to purchase these products and services. Specifically, SCO has publicly misrepresented the legitimacy of these products and services by falsely representing that IBM no longer has the right, authority and license to use, produce and distribute these products and by misrepresenting SCO's own rights in and to Unix, AIX, Dynix and Linux.

122. SCO has published its false statements in a series of widely-distributed press releases, press interviews and other streams of commerce, as part of its bad faith campaign to discredit IBM's products and services in the marketplace, to increase the perceived value of SCO's limited rights to UNIX and to promote SCO's own UNIX operating systems, UnixWare and Open Server.

123. These statements are likely to cause confusion and mistake and have in fact caused confusion and mistake as to the characteristics of IBM's goods, products and/or services.

124. As a direct result of SCO's false representations, all of which are in violation of 15 U.S.C. § 1125, IBM has suffered damages in an amount to be determined at trial. IBM is also entitled to damages and attorneys' fees pursuant to 15 U.S.C. § 1117(a).

THIRD COUNTERCLAIM

Unfair Competition

125. IBM repeats and realleges the averments in paragraphs 1 through 124, with the same force and effect as though they were set forth fully herein.

126. IBM has invested over two decades and hundreds of millions of dollars in the creation and development of AIX. Through IBM' s efforts, innovation and hard work, AIX has become one of the leading UNIX operating systems, and IBM' s AIX products and services are sold and used throughout the United States. Similarly, IBM expended substantial resources to acquire Dynix and has invested substantial time and effort in developing its Linux-related products and services.

127. SCO has intentionally, knowingly, wrongfully and in bad faith engaged in a public pattern of conduct aimed at depriving IBM of the value of its AIX, Dynix and Linux-related products and services and misappropriating the same for the benefit of SCO' s UNIX licensing business as well as SCO' s competing UNIX operating systems. SCO' s misconduct is likely to result in confusion in the marketplace and has in fact resulted in confusion concerning AIX, Dynix and Linux.

128. SCO has engaged in unfair competition by falsely claiming ownership of IBM' s intellectual property as well as the intellectual property created by the open-source community; publishing false and disparaging statements about AIX and Dynix; making bad faith misrepresentations concerning IBM' s rights to UNIX, AIX and Dynix; misusing and misrepresenting SCO's limited rights in UNIX to injure IBM; and falsely accusing IBM of theft of SCO' s intellectual property.

129. As a direct result of SCO's unfair competition, IBM has and will continue to suffer damage to its reputation, goodwill, and business in an amount to be determined at trial. Because SCO's acts of unfair competition were and are willful and malicious, IBM is also entitled to punitive damages.

FOURTH COUNTERCLAIM

Intentional Interference with Prospective Economic Relations

130. IBM repeats and realleges the averments in paragraphs 1 through 129, with the same force and effect as though they were set forth fully herein.

131. IBM is actively engaged in the development, manufacture and sale of AIX and products and services that work with Linux, and IBM has sold and distributed Dynix. IBM has prospective business relationships with numerous companies and individuals to whom IBM has sold and/or licensed these products and services and/or to whom IBM seeks to sell and/or license these products and services. IBM also has prospective business relationships with business and individual members of the Linux and open-source software development distribution, service and computing communities with whom IBM seeks to do business in various capacities, including through research and development efforts.

132. SCO is fully aware of these prospective business relationships and the importance of the relationships to IBM's continued commercial success.

133. SCO has intentionally interfered with these relationships through improper means, including by making false and misleading statements to IBM's prospective customers that IBM no longer has the right, authority and license to use, produce and distribute AIX, Dynix and Linux-related products. SCO has also misrepresented its own rights relating to these operating systems. The purpose of SCO's unlawful conduct is to injure IBM by driving prospective customers of AIX, Dynix and IBM's Linux-related products and services away from purchasing and licensing the same from IBM.

134. Furthermore, SCO has intentionally interfered with IBM's valuable economic relationships with business and individual members of the Linux and open-source software communities by falsely and publicly accusing IBM of inserting "truckloads" of SCO's intellectual property into the Linux kernel and related software. Again, the purpose of SCO's unlawful conduct is to injure IBM by driving away these businesses and individuals from future open-source collaborations with IBM.

135. IBM has suffered damages from SCO's tortious interference with its economic relations in an amount to be determined at trial. Because SCO's tortious interference with IBM's prospective economic relations was and is willful and malicious, IBM is entitled to punitive damages.

FIFTH COUNTERCLAIM

Unfair and Deceptive Trade Practices

136. IBM repeats and realleges the averments in paragraphs 1 through 135, with the same force and effect as though they were set forth fully herein.

137. SCO has engaged in unfair and deceptive trade practices by, among other things, falsely representing that IBM no longer has the right, authority and/or license to use, produce and/or distribute AIX, Dynix and Linux-related products; misrepresenting SCO's and IBM's rights relating to these operating systems; and publishing false and disparaging statements about AIX, Dynix and Linux.

138. SCO's false statements and misrepresentations were made in connection with SCO's solicitation of business, and in order to induce IBM and others to purchase products and licenses from SCO. SCO's statements and misrepresentations are likely to cause confusion and misunderstanding as to the qualities, benefits and characteristics of AIX, Dynix and Linux. SCO has misrepresented the qualities, benefits and/or characteristics of these products.

139. SCO's misconduct was undertaken for the purpose of deceiving the marketplace and defaming IBM and has deceived and misled the public and IBM's customers; disparaged the goods, services, and business of IBM; and otherwise injured IBM's business in violation of N.Y. Gen. Bus. Law § 349 and the laws of other states.

140. IBM has provided SCO with notice of its false and misleading statements, and has given SCO an opportunity to correct those statements. SCO has refused and has instead opted to make more false and misleading statements.

141. As a direct result of SCO's unfair and deceptive trade practices, the public at large, including AIX, Dynix and Linux users, has been harmed by SCO's campaign to foster fear, uncertainty and doubt about AIX, Dynix and Linux. Moreover, IBM has suffered damages in an amount to be determined at trial. Because SCO's acts of unfair and deceptive trade practices were and are willful, knowing and malicious, IBM is also entitled to treble damages and/or fees pursuant to N.Y. Gen. Bus. Law § 349(h).

SIXTH COUNTERCLAIM

Breach of the GNU General Public License

142. IBM repeats and realleges the averments in paragraphs 1 through 141, with the same force and effect as though they were set forth fully herein.

143. IBM has made contributions of source code to Linux under the GPL on the condition that users and distributors of such code, including SCO, abide by the terms of the GPL in modifying and distributing Linux products, including, for example, the requirement that they distribute all versions of software licensed under the GPL (original or derivative) under the GPL and only the GPL.

144. SCO has taken source code made available by IBM under the GPL, included that code in SCO's Linux products, and distributed significant portions of those products under the GPL. By so doing, SCO accepted the terms of the GPL (pursuant to GPL § 5), both with respect to source code made available by IBM under the GPL and with respect to SCO's own Linux distributions.

145. SCO has breached the GPL by, among other things, copying, modifying, sublicensing or distributing programs licensed under the GPL, including IBM contributions, on terms inconsistent with those set out in the GPL; and seeking to impose additional restrictions on the recipients of programs licensed under the GPL, including IBM contributions, distributed by SCO.

146. Based upon its breaches of the GPL and the misconduct described herein, SCO's rights under the GPL, including but not limited to the right to distribute the copyrighted works of others included in Linux under the GPL, terminated (pursuant to § 4 of the GPL). The GPL prohibits SCO from, among other things, asserting certain proprietary rights over, or attempting to restrict further distribution of any program distributed by SCO under the terms of the GPL, except as permitted by the GPL.

147. As a result of SCO's breaches of the GPL, countless developers and users of Linux, including IBM, have suffered and will continue to suffer damages and other irreparable injury. IBM is entitled to a declaration that SCO's rights under the GPL terminated, an injunction prohibiting SCO from its continuing and threatened breaches of the GPL and an award of damages in an amount to be determined at trial.

SEVENTH COUNTERCLAIM

Promissory Estoppel

148. IBM repeats and realleges the averments in paragraphs 1 through 147, with the same force and effect as though they were set forth fully herein.

149. SCO made a clear and unambiguous promise to IBM and others that SCO would copy, modify or distribute programs distributed by IBM and others under the GPL only on the terms set out in the GPL; and would not assert rights to programs distributed by SCO under the GPL except on the terms set out in the GPL.

150. IBM and others reasonably, prudently and foreseeably relied upon these promises, such as by making contributions under the GPL and committing resources to open- source projects.

151. SCO knew or should have known that IBM and others would rely and in fact relied upon SCO's promises and knew or should have known that those promises would induce and in fact induced action or forbearance on the part of IBM and others.

152. SCO was and is aware of all material facts relating to IBM's reliance on SCO's promises including but not limited to IBM's contributions under the GPL, SCO's distributions under the GPL and the intent, meaning and import of the GPL.

153. As a result of its reliance upon SCO's promises, IBM has sustained injuries and is entitled to an award of damages in an amount to be determined at trial. In addition to an award of damages, IBM is entitled to declaratory and injunctive relief, including but not limited to a declaration that SCO is not entitled to assert proprietary rights with respect to products distributed by SCO under the GPL except upon the terms set out in the GPL.

EIGHTH COUNTERCLAIM

Copyright Infringement

154. IBM repeats and realleges the averments in paragraphs 1 through 153, with the same force and effect as though they were set forth fully herein.

155. As stated, IBM has made contributions of source code to Linux under the GPL. IBM is, and at all relevant times has been, the owner of valid copyrights in these contributions, as well as of all the rights, title and interest in those copyrights.

156. IBM holds the following certificates of copyright from the United States Copyright Office (copies of which are attached hereto as Exhibits O - U), among others:

Registration No. Date of Registration

Title of Work

TX 5-757-696 August 15, 2003 IBM Enterprise Volume Management System
TX 5-757-697 August 15, 2003 IBM Enterprise Class Event Logging
TX 5-757-698 August 15, 2003 IBM Dynamic Probes
TX 5-757-699 August 15, 2003 IBM Linux Support Power PC64
TX 5-757-700 August 15, 2003 IBM Omni Print Driver
TX 5-757-701 August 15, 2003 IBM Journaled File System
TX 5-757-702 August 15, 2003 IBM Next Generation Posix Threading
TX 5-856-466 February 2, 2004 IBM Linux Kernel Support for JFS
TX 5-856-467 February 2, 2004 IBM Linux Kernel S390 Support
TX 5-856-468 February 2, 2004 IBM Linux Kernel Support for Service Processor
TX 5-856-469 February 2, 2004 IBM Linux Kernel Support for Memory Expansion Technology
TX 5-856-470 February 2, 2004 IBM Linux Kernel Support for IBM eServer iSeries Devices
TX 5-856-471 February 2, 2004 IBM Linux Kernel Support for PCI Hotplug
TX 5-856-472 February 2, 2004 IBM Linux Kernel Support for pSeries Hypervisor Terminal
TX 5-856-473 February 2, 2004 IBM Linux Kernel Support for PPC64 Support
TX 5-856-474 February 2, 2004 IBM Linux Kernel Support for Mwave Modem

157. IBM has placed or caused to be placed a copyright notice on these contributions of source code to Linux under the GPL and has otherwise complied with the copyright laws of the United States in this respect. IBM does not permit the unauthorized copying of its Linux contributions.

158. IBM granted SCO and others a non-exclusive license to the above-listed copyrighted contributions to Linux on the terms set out in the GPL and only on the terms set out in the GPL. IBM made these contributions on the condition that users and distributors of its copyrighted code, including SCO, abide by the terms of the GPL in copying, modifying and distributing Linux products.

159. SCO has infringed and is infringing IBM's copyrights by copying, modifying, sublicensing and/or distributing Linux products except as expressly provided under the GPL. SCO has taken copyrighted source code made available by IBM under the GPL, included that code in SCO's Linux products, and copied, modified, sublicensed and/or distributed those products other than as permitted under the GPL. SCO has no right -- and has never had any right - to copy, modify, sublicense and/or distribute the IBM copyrighted code except pursuant to the GPL.

160. As a result of SCO's infringement, IBM has been damaged and is entitled to an award of actual and/or statutory damages pursuant to 17 U.S.C. § 504 in an amount to be proven at trial. Because SCO's infringement has been willful, deliberate and in utter disregard and derogation of IBM's rights, IBM is entitled to enhanced statutory damages pursuant to 17 U.S.C. § 504. IBM is entitled to costs and attorney's fees pursuant to 17 U.S.C. § 505.

161. In addition, IBM is entitled to injunctive relief pursuant to 17 U.S.C. § 502, as SCO will continue to infringe IBM's copyrights in violation of the copyright laws of the United States unless restrained by this Court. IBM is also entitled to an appropriate order pursuant to 17 U.S.C. § 503.

NINTH COUNTERCLAIM

Declaratory Judgment of Noninfringement of Copyrights

162. IBM repeats and realleges the averments in paragraphs 1 through 161, with the same force and effect as though they were set forth fully herein.

163. SCO purports to hold copyrights relating to UNIX software, including the following copyrights:

Registration No. Date of Registration

Title of Work

TXU-510-028 March 25, 1992 UNIX Operating System Edition 5 and Instruction Manual
TX u-511-236 April 7, 1992 UNIX Operating System Edition 6 and Instruction Manual
TXu-516-705 May 15, 1992 UNIX Operating System Edition 32V and Instruction Manual
TXu-516-705 May 15, 1992 UNIX Operating System Edition 7 and Instruction Manual
TXu-301-868 November 25, 1987 Operating System Utility Programs
TX5-787-679 June 11, 2003 UNIXWARE 7.1.3
TX 5-750-270 July 7, 2003 UNIX System V RELEASE 3.0
TX 5-750-269 July 7, 2003 UNIX SYSTEM V RELEASE 3.1
TX 5-750-271 July 7, 2003 UNIX SYSTEM RELEASE 3.2
TX 5-776-217 July 16, 2003 UNIX SYSTEM V RELEASE 4.0
TX 5-705-357 June 30, 2003 UNIX SYSTEM V RELEASE 4.1ES
TX 5-762-235 July 3, 2003 UNIX SYSTEM V RELEASE 4.2
TX 5-762-234 July 3, 2003 UNIX SYSTEM V RELEASE 4.1
TX 5-750-268 July 9, 2003 UNIX SYSTEM V RELEASE 3.2

164. SCO has sued IBM claiming that IBM has infringed, induced the infringement of, and contributed to the infringement of, SCO's purported UNIX copyrights by, among other things, continuing to "reproduce, prepare derivative works of, and distribute copyrighted UNIX materials through its activities relating to AIX and Dynix.

165. IBM does not believe that its activities relating to AIX and Dynix including any reproduction, improvement and distribution of AIX and Dynix, infringe, induce the infringement of, or contribute to the infringement of valid, enforceable copyrights owned by SCO.

166. An actual controversy exists between SCO and IBM as to the noninfringement of SCO's copyrights and the validity of any purported SCO copyrights concerning UNIX.

167. IBM is entitled to a declaratory judgment pursuant to 28 U. C. Section 2201 that IBM does not infringe, induce the infringement of, or contribute to the infringement of any SCO copyright through the reproduction, improvement, and distribution of AIX and Dynix, and that some or all ofSCO' s purported copyrights in UNIX are invalid and unenforceable.

TENTH COUNTERCLAIM

Declaratory Judgment of Noninfringement of Copyrights

168. IBM repeats and realleges the averments in paragraphs 1 through 167 with the same force and effect as though they were set forth fully herein.

169. As discussed above, SCO purports to hold copyrights relating to UNIX software.

170. SCO has sued IBM claiming that IBM has infringed, induced the infringement of, and contributed to the infringement of, SCO's purported UNIX copyrights by, among other things, continuing to "reproduce, prepare derivative works of, and distribute copyrighted UNIX materials through its activities relating to Linux.

171. IBM does not believe that its activities relating to Linux, including any use, reproduction and improvement of Linux, infringe, induce the infringement of, or contribute to the infringement of valid, enforceable copyrights owned by SCO.

172. An actual controversy exists between SCO and IBM as to the noninfringement ofSCO' s copyrights and the validity of any purported SCO copyrights concerning UNIX.

173. IBM is entitled to a declaratory judgment pursuant to 28 U. C. 9 2201 that IBM does not infringe, induce the infringement of, or contribute to the infringement of any SCO copyright through its Linux activities, including its use, reproduction and improvement of Linux, and that some or all of SCO' s purported copyrights in UNIX are invalid and unenforceable.

ELEVENTH COUNTERCLAIM

Patent Infringement

174. IBM repeats and realleges the averments in paragraphs 1 through 173, with the same force and effect as though they were set forth fully herein.

175. IBM is the lawful owner, by assignment, of the entire right, title and interest in United States Patent No. 4814746 ("the '746 Patent"), duly and legally issued on March 21, 1989 to Miller et aI., entitled "Data Compression Method". A copy of the ' 746 Patent is attached hereto as Exhibit X.

176. Upon information and belief, SCO has infringed, contributorily infringed and/or actively induced others to infringe the '746 Patent within this judicial district and elsewhere in violation of35 U. C. 9271 by, without authority or license from IBM, (a) making, using, selling and/or offering to sell products, including Unix Ware and Open Server, that practice one or more claims of the '746 Patent and (b) actively, knowingly and intentionally causing and assisting others to infringe one or more claims of the' 746 Patent.

177. Upon information and belief, SCO will continue to infringe, contributorily infringe and/or actively induce others to infringe the '746 Patent unless enjoined by this Court.

178. IBM has been and continues to be damaged and irreparably harmed by the aforesaid acts of infringement of the '746 Patent by SCD, and will suffer additional damages and irreparable harm unless this Court enjoins SCD from further infringement.

179. Upon information and belief, SCO's continued manufacture, use, sale and/or offer for sale of the infringing products, including UnixWare and Open Server, following receipt of notice from IBM of SCO's infringing activities was and is willful, and such activities by SCO prior to receipt of such notice also have been willful if, after reasonable opportunity for discovery, evidence arises that SCO had actual knowledge that its actions could constitute infringement of the '746 Patent, making this an exceptional case and justifying the assessment of treble damages pursuant to 35 U.S.C. § 284, and the award of attorneys' fees pursuant to 35 U.S.C. § 285.

TWELFTH COUNTERCLAIM

Patent Infringement

180. IBM repeats and realleges the averments in paragraphs 1 through 179, with the same force and effect as though they were set forth fully herein.

181. IBM is the lawful owner, by assignment, of the entire right, title and interest in United States Patent No. 4,953,209 ("the ‘209 Patent"), duly and legally issued on August 28, 1990 to Ryder et al., entitled "Self-Verifying Receipt and Acceptance System for Electronically Delivered Data Objects". A copy of the ‘209 Patent is attached hereto as Exhibit Y.

182. Upon information and belief, SCO has infringed, contributorily infringed and/or actively induced others to infringe the '209 Patent within this judicial district and elsewhere in violation of 35 U.S.C. § 271 by, without authority or license from IBM, (a) making, using, selling and/or offering to sell products, including Unix Ware, that practice one or more claims of the '209 Patent and (b) actively, knowingly and intentionally causing and assisting others to infringe one or more claims of the '209 Patent.

183. Upon information and belief, SCO will continue to infringe, contributorily infringe and/or actively induce others to infringe the ‘209 Patent unless enjoined by this Court.

184. IBM has been and continues to be damaged and irreparably harmed by the aforesaid acts of infringement of the '209 Patent by SCO, and will suffer additional damages and irreparable harm unless this Court enjoins SCO from further infringement.

185. Upon information and belief, SCO's continued manufacture, use, sale and/or offer for sale of the infringing products, including Unix Ware, following receipt of notice from IBM of SCO's infringing activities by SCO prior to receipt of such notice also have been willful if, after reasonable opportunity for discovery, evidence arises that SCO had actual knowledge that its actions could constitute infringement of the '209 Patent, making this an exceptional case and justifying the assessment of treble damages pursuant to 35 U.S.C. § 284, and the award of attorneys' fees pursuant to 35 U.S.C. § 285.

THIRTEENTH COUNTERCLAIM

Patent Infringement

186. IBM repeats and realleges the averments in paragraphs 1 through 185, with the same force and effect as though they were set forth fully herein.

187. IBM is the lawful owner, by assignment, of the entire right, title and interest in United States Patent No. 5,805,785 ("the ‘785 Patent"), duly and legally issued on September 8, 1998 to Dias et al., entitled "Method for Monitoring and Recovery of Subsystems in a Distributed/Clustered System". A copy of the ‘785 Patent is attached hereto as Exhibit Z.

188. Upon information and belief, SCO has infringed, contributorily infringed and/or actively induced others to infringe the '785 Patent within this judicial district and elsewhere in violation of 35 U.S.C. § 271 by, without authority or license from IBM, (a) making, using, selling and/or offering to sell products, including Reliant HA, that practice one or more claims of the '785 Patent and (b) actively, knowingly and intentionally causing and assisting others to infringe one or more claims of the '785 Patent.

189. Upon information and belief, SCO will continue to infringe, contributorily infringe and/or actively induce others to infringe the ‘785 Patent unless enjoined by this Court.

190. IBM has been and continues to be damaged and irreparably harmed by the aforesaid acts of infringement of the ‘785 Patent by SCO , and will suffer additional damages and irrevocable harm unless this Court enjoins SCO from further infringement.

191. Upon information and belief, SCO's continued manufacture, use, sale and/or offer for sale of the infringing products, including Reliant HA, following receipt of notice from IBM of SCO's infringing activities was and is willful, and such activities by SCO prior to receipt of such notice also have been willful if, after reasonable opportunity for discovery, evidence arises that SCO had actual knowledge that its actions could constitute infringement of the ‘785 Patent, making this an exceptional case and justifying the assessment of treble damages pursuant to 35 U.S.C. § 284, and the award of attorneys' fees pursuant to 35 U.S.C. § 285.

FOURTEENTH COUNTERCLAIM

Declaratory Judgment

192. IBM repeats and realleges the averments in paragraphs 1 through 191, with the same force and effect as though they were set forth fully herein.

193. SCO has breached its contractual obligations to IBM, violated the Lanham Act, engaged in unfair competition, interfered with IBM's prospective economic relations, engaged in unfair and deceptive trade practices, breached the GPL, infringed IBM copyrights and infringed IBM patents, as stated above.

194. Pursuant to 28 U.S.C. § 2201, IBM is entitled to declaratory relief with respect to SCO's and IBM's rights, including among other things a declaration that SCO has violated IBM's rights as outlined above by breaching its contractual obligations to IBM, violating the Lanham Act, engaging in unfair competition, interfering with IBM's prospective economic relations, engaging in unfair and deceptive trade practices, breaching the GPL, infringing IBM copyrights and infringing IBM patents, and is estopped as outlined above.

195. Moreover, IBM is entitled to a declaration that (1) SCO has no right to assert, and is estopped from asserting, proprietary rights over programs that SCO distributed under the GPL except as permitted by the GPL; (2) SCO is not entitled to impose restrictions on the copying, modifying or distributing of programs distributed by it under the GPL except as set out in the GPL; and (3) any product into which SCO has incorporated code licensed pursuant to the GPL is subject to the GPL and SCO may not assert rights with respect to that code except as provided by the GPL.

196. There is a justiciable controversy between IBM and SCO with respect to all of the issues described above.

197. Absent declaratory relief, SCO's misconduct will continue to cause injury to IBM, the open-source community and the public at large.

PRAYER FOR RELIEF

WHEREFORE, counterclaim-plaintiff IBM prays that this Court enter judgment on the counterclaims in favor of IBM and against SCO:

(a) awarding IBM compensatory damages;

(b) awarding damages pursuant to 15 U.S.C. § 1117(a) and 17 U.S.C. § 504;

(c) awarding IBM punitive damages;

(d) granting IBM treble damages pursuant to 35 U.S.C. § 284;

(e) granting IBM declaratory relief, including a declaration that (i) that IBM does not, through its reproduction, improvement, and distribution of AIX and Dynix, infringe, induce the infringement of, or contribute to the infringement of any valid and enforceable copyright owned by SCO; (ii) that IBM does not, through its Linux activities, including its use, reproduction and improvement of Linux, infringe, induce the infringement of, or contribute to the infringement of any valid and enforceable copyright owned by SCO; (iii) SCO has violated IBM's rights as outlined above by breaching its contractual obligations to IBM, violating the Lanham Act, engaging in unfair competition, interfering with IBM's prospective economic relations, engaging in unfair and deceptive trade practices, breaching the GPL, infringing IBM copyrights and infringing IBM patents; (iv) SCO has no right to assert, and is estopped from asserting, proprietary rights over programs that SCO distributed under the GPL except as permitted by the GPL; and is not entitled to impose restrictions on the copying, modifying or distributing of programs distributed by it under the GPL except as set out in the GPL; and (v) any product into which SCO has incorporated code licensed pursuant to the GPL is subject to the GPL and SCO may not assert rights with respect to that code except as provided by the GPL;

(f) granting IBM injunctive relief, enjoining and restraining SCO and its affiliates, subsidiaries, officers, agents, servants, employees, attorneys, successors and assigns and all others persons acting in concert with them, from further violating IBM's rights as described above, including in particular from (i) misrepresenting SCO's rights and IBM's rights to Unix technology, such as that SCO can, will or has in fact revoked IBM right to use Unix, (ii) misrepresenting that IBM no longer has the right, authority and license to use, produce and distribute AIX, Dynix and IBM's Linux-related products; (iii) publishing false and disparaging statements about AIX, Dynix and IBM's Linux-related products; (iv) engaging in further acts of unfair competition; (v) claiming certain ownership rights over programs made available under the GPL; (vi) engaging in unfair and deceptive trade practices; (vii) further infringement of IBM's copyrights; and (viii) further infringement or inducement of infringement of the ‘746, ‘209 and ‘785 Patents;

(g) awarding IBM costs, expenses and reasonable attorneys' fees pursuant to 35 U.S.C. § 285, 15 U.S.C. § 1117(a), Utah Code Ann. § 13-24-5, N.Y. Gen. Bus. Law § 349(h), and 17 U.S.C. § 505;

(h) awarding IBM pre- and post-judgment interest on the damages caused to IBM as a result of all wrongful acts alleged herein; and

(i) granting IBM such other and further relief as this Court deems just and proper, including costs, disbursements and reasonable attorneys' fees.

JURY DEMAND

IBM demands a trial by jury on all issues so triable.

DATED this ___ day of ________, 2004

SNELL & WILMER LLP

____________________
Alan L. Sullivan
Todd M. Shaughnessy

CRAVATH, SWAINE & MOORE LLP
Evan R. Chesler
David R. Marriott

Counsel for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation

Of counsel:

MORGAN & FINNEGAN LLP
Chrstopher A. Hughes
Richard Straussman
[address, phone]

INTERNATIONAL BUSINESS MACHINES
CORPORATION
Donald J. Rosenberg
Alec S. Berman
[address, phone]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation


  


IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights | 561 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Slightly OT: sPeedJ
Authored by: Anonymous on Wednesday, March 31 2004 @ 05:18 AM EST
PJ,

d*rn you're fast today. Any faster and me reading won't be able to follow your
posting...

Anyway, thanks for the great work!

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 05:29 AM EST
160. As a result of SCO's infringement, IBM has been damaged and is entitled to an award of actual and/or statutory damages pursuant to 17 U.S.C. § 504 in an amount to be proven at trial. Because SCO's infringement has been willful, deliberate and in utter disregard and derogation of IBM's rights, IBM is entitled to enhanced statutory damages pursuant to 17 U.S.C. § 504. IBM is entitled to costs and attorney's fees pursuant to 17 U.S.C. § 505.

Nice, not only nail SCO for their GPL violations, but make them pay for the whole legal mess too!

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: nattt on Wednesday, March 31 2004 @ 05:38 AM EST
"111. SCO has infringed and is infringing IBM' s copyrights by copying,
modifying, sublicensing and/or distributing Linux products including IBM' s
copyrighted contributions after its rights under the GPL terminated. SCO has
taken copyrighted source code made available by IBM under the GPL, included
that code in SCO's Linux products, and copied modified, sublicensed and/or
distributed those products other than as permitted under the GPL."

I see this as the most "key" statement I've read so far by IBM. This
is them
turning from defense to pure attack. They use the GPL as a shield and a
weapon - or a double edged sword that cuts SCO twice for one thrust!

[ Reply to This | # ]

Thanks!
Authored by: the_flatlander on Wednesday, March 31 2004 @ 05:41 AM EST
Thank you, IBM. Your complaint reads like a list of the community's complaint
against the SCOundrels. You have been put in the posistion of proxy for the
Linux community, and you have done an outstanding job representing yourself, and
therefore, all of us. Bravo!

Thanks again PJ, MathFox and the rest of you. Well done.

The Flatlander

As a straegy to slow Linux, I'd have to say that this fiaSCO was a complete
bust. The only "legal risk" one takes using Linux is in being sued by
Microsoft or its proxies. The sooner we abandon Microsoft altogether the safer
we'll all be. We all owe it to each other to stop buying Microsoft products and
to encourage our friends and employers to do the same. Being Microsoft free is
all the indemnification anyone needs.

[ Reply to This | # ]

no comment
Authored by: Anonymous on Wednesday, March 31 2004 @ 05:53 AM EST
From InfoWorld article...

the Representatives from IBM and SCO declined to comment on Friday's court filing.

They must realise they're in trouble if they're keeping their mouths shut.

M.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: pjcm on Wednesday, March 31 2004 @ 06:05 AM EST
In the Prayer for relief Section f(viii) it looks like IBM are going for a total
lock out of SCO.

(viii) futher infringement or inducement of infringment of the '746, '209 and
'785 Patents.

If I read this correctly IBM is asking that SCO cease and desist from Selling or
Supporting Unixware and Reliant HA

IANAL Paddy

[ Reply to This | # ]

What does IBM know that we do not know yet!
Authored by: Anonymous on Wednesday, March 31 2004 @ 06:10 AM EST
34. ~ Indeed, SCO incorporated certain code licensed pursuant to the GPL into
its proprietary Unix products. ~

Hmmm, This come after IBM got the SCO "Holy Grail" Unixware code.

I think SCO would like very much to split this case.
For like .... Brazil

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 06:12 AM EST
I hear the sound of nails being pounded in a coffin...
...R.I.P. SCO......

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 06:37 AM EST
"Until it undertook the scheme (emphasis added) described herein,..."

I love it, Darl's blustering and posturing are coming home to bite.

[ Reply to This | # ]

OT: Bryan Sparks and Devicelogics: DR-DOS booting Linux
Authored by: Arthur Marsh on Wednesday, March 31 2004 @ 07:23 AM EST

Link is here

---http://www.unix-systems.org/what_is_unix.html

[ Reply to This | # ]

Synchronicity and tables.
Authored by: cheros on Wednesday, March 31 2004 @ 07:25 AM EST
Interesting timing. Two bricks shortly after eachother ;-).

I wish I had the time to put a table together which mapped share prices of, say,
SCO, IBM, Novell and MS against activity (press statements, news articles, so
called analysts missing the point, barring in countries like Germany, EU
sanctions, etc etc) over the whole time of this saga.

If anything it might help Darl with defending his actions if/when the SEC
decides it might want a little chat. Or it might help the SEC instead.

Anyone who's got more time?

[ Reply to This | # ]

Where did they find Darls Muzzle?
Authored by: Anonymous on Wednesday, March 31 2004 @ 07:33 AM EST
Representatives from IBM and SCO declined to comment on Friday's court filing.

Man usually factual information doesn't even stun his stupidity or willingness
to say something stupid.

[ Reply to This | # ]

Errata
Authored by: jldill22 on Wednesday, March 31 2004 @ 07:35 AM EST
Not a big point but in Paragraph 1, lines 3 and the text in the Second Amended
Counterclaim PDF is “...right to Unix operating systems developed...”. The text
in the prior document was "...right to the Unix operating system
developed..." so its a change.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Electric Dragon on Wednesday, March 31 2004 @ 07:40 AM EST
Interestingly, IBM have dropped one of their Patent Counterclaims. The Tenth
Counterclaim in the Amended Counterclaims refers to infringement of Patent No.
4,821,211 ("Method of Navigating Among Program Menus Using a Graphical Menu
Tree"). The Second Amended Counterclaims filing has omitted that claim
completely. Maybe IBM felt that it wouldn't be straightforward to combat SCO's
Affirmative Defence on that patent, or maybe something turned up in discovery
that makes it harder for IBM to prove infringement?

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Peter Smith on Wednesday, March 31 2004 @ 07:42 AM EST
IBM, we have waited a long time for this, and you haven't let us down.

[ Reply to This | # ]

Isn't this a press release ?
Authored by: Anonymous on Wednesday, March 31 2004 @ 07:44 AM EST
I guess somebody at IBM's marketing dep. just
realized the documents they send to the court
get a lot of press coverage and decided to
add a small press-release preable :-)

[ Reply to This | # ]

Pump&Dump dragged into the record
Authored by: Paul Shirley on Wednesday, March 31 2004 @ 07:49 AM EST
98. ... SCO has declined to reveal the particulars of the alleged violations in order to artificially and improperly inflate the price of its stock.

Having this in the court record when they lose just has to be bad for SCOG. I bet the SEC will take a complaint from IBM a lot more seriously than any Groklaw or /. reader.

[ Reply to This | # ]

Being educated
Authored by: icebarron on Wednesday, March 31 2004 @ 07:52 AM EST
One might think that Darlll and company are getting educated by this and the ones that are about to become public.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 08:06 AM EST
Beautiful document. Clear, consise and even a non lawyer like myself can read
and follow all of their points. Many points with specific citations. They
distilled it down, removed all of SCO FUD and just stuck to the facts. Thank
you and thanks to those who are taking the time to provide us the general public
with this information.

[ Reply to This | # ]

Party's over
Authored by: Anonymous on Wednesday, March 31 2004 @ 08:10 AM EST
Okay Guys,

Party's over, let's wrap it up and go home.
Darl, would you, after you cleaned up your mess and moppd the floor, shut off
the lights and lock the door?...

Muhahahaha

[ Reply to This | # ]

They finally are getting the big picture
Authored by: icebarron on Wednesday, March 31 2004 @ 08:18 AM EST
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 This is straight from their amended compalint. I noticed that they are complaining that services sell better than licenses. You think that after reading this, that they may finally be getting the big picture. Some day maybe Gates and Co will get a clue. Welcome to the get with the program people form of doing business in the digital age... Dan "We are going to educate people on the use of intellectual property"

[ Reply to This | # ]

Hope Bills Gates and Steve Ballmer are reading this on Groklaw.net
Authored by: Anonymous on Wednesday, March 31 2004 @ 08:20 AM EST
Hope you are reading this Bill Gates and Steve Ballmer on Groklaw.net. I hope
you will realize that you will not have the freedom to hide behind public
ignorance when it comes to your anti-competitive lawsuits and court actions such
as the ones you had with Stac electronics, Caldera DOS, and Netscape. Your every
move will be watched. The public floor to watch a court case will become the
internet and all will be laid open for all to see.

When you went to court with those matters, I never knew court proceedings like
this went on, deciding the fate of the software industry. I was only interested
in the technology, not the technicalities. I guess that is why you didn't think
the internet was a valuable tool, Bill. You knew someone would use it against
your anti-competitive schemes. Sorry, I guess your party is over.

Thank you Pamela Jones and the rest of the Groklaw.net crew. I believe
Groklaw.net is quickly becoming an essential part in the fight for fairness,
honesty, and freedom in the computing world. Please do not become biased like so
many news agencies have become these days. Always remain committed to Truth,
Justice, and Love in America and the world as you are now.

Keep up the good work.

[ Reply to This | # ]

OT: Not nazgul but...
Authored by: Anonymous on Wednesday, March 31 2004 @ 08:20 AM EST
Doesn't this remind you of the Ents' treatment of Saruman?
The parallels are amusing; the analogy can be stretched
farther than it should. Even so far as turning the One Ring
of IP law back on itself to undo the evil to which it has been
perverted, contrary to its original intention, so that all us
code hobbits can get back to tending our gardens.

I don't mean to deprive the IBM lawyers of their fierce and
Nazgul-like aspect.

Roger Hayes

[ Reply to This | # ]

Why?
Authored by: JustFree on Wednesday, March 31 2004 @ 08:46 AM EST
Why did SCO Group pick IBM for their original ligiation? Why did SCO claim that
Lunix is tainted with Unix code? This makes abolutely no sense. SCO Group has
painted themselves in a corner, and IBM wants they to pay for all the damages.

---
as in free speech get it.

[ Reply to This | # ]

OT : Press is catching up ...
Authored by: nvanevski on Wednesday, March 31 2004 @ 08:51 AM EST
Excellent article on BusinessWeek here!

[ Reply to This | # ]

errata
Authored by: Anonymous on Wednesday, March 31 2004 @ 08:59 AM EST
between number 123 and 125, there is 89 instead of 124.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 09:13 AM EST
This ought to be in Bold Red Type:

29. SCO accepted the terms of the GPL by modifying and distributing Linux
products. By distributing Linux products under the GPL, SCO agreed, among other
things, not to assert -- indeed, it is prohibited from asserting -- certain
proprietary rights over any programs distributed by SCO under the terms of the
GPL. SCO also agreed not to restrict further distribution of any programs
distributed by SCO under the terms of the GPL.


Kinda says it all.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights/Baystar
Authored by: Hygrocybe on Wednesday, March 31 2004 @ 09:46 AM EST
This is devastating (and quite deserved) for SCO ? I wonder if there are now
second thoughts on a little matter of $50 million ?

---
Blackbutt, Australia

[ Reply to This | # ]

How far does GPL violation extend ?
Authored by: mkn421 on Wednesday, March 31 2004 @ 09:46 AM EST
Is the Linux kernel covered by a single instance of the GPL or is each
significant contribution covered by separate instances of the GPL held by the
respective contributors ?
Or put another way, given file foo.c contributed by EntityA and file bar.c
contributed by EntityB (both under the GPL). If EntityC violates the GPL with
foo.c does that incur a violation of the GPL with respect to bar.c ?

[ Reply to This | # ]

The GPL Portions Initiate the Moglen Countergambit
Authored by: Dave23 on Wednesday, March 31 2004 @ 10:10 AM EST
The openings of this legal chess-game are finished and we are now well into the middle game. Pieces have been exchanged and the chessboard has been simplified. IBM (black) has defended well, and SCOX has overextended itself in attack. IBM (as well as the rest of us) has seen the errors in The SCO Group's play. But the issue has always been: how to exploit those errors with maximum devastation?

From what I see, Section P (paragraphs 108-111) of the recitation of facts and Counterclaims 6, 7 and 8 are specific to the GPL. In essence IBM here at last is stating to the judge (in Professor Moglen's words, more or less): "SCOX is violating the GPL. Make them stop."

To extend the chess analogy, IBM has at last managed to move the GPL Knight into position to offer both check to SCOX's litigation King and en garde to SCOX's business Queen.

Now let's see how SCOX tries to reply. SCOX must respond to these counter-claims or their game on the litigation chessboard could be over.

Will The SCO Group be required to move their King, and thus be forced to give up their Queen?

After a frantic search, can The SCO Group's lawyers find another of their legal chessmen somewhere on the board that might offer discovered check or a capture the GPL Knight? SCOX has no knights of their own -- they foolishly threw them away early in the game. Their uncaptured Rook was never developed and so is blocked (IBM developed their patent Rooks early, and they seem to be ranging freely over half the board). They did manage for awhile to advance the fear, uncertainty and doubt pawns, but that phalanx has been blocked by the novel Groklaw defense. Is that white Pawn of antitrust close enough? Is their Bishop of severability even on the right color square?

Or will their lawyers actually (after all of Darl's bluster to do so in the past year) argue that the GPL Knight is 'unconstitutional' and that, somehow, the rules don't allow for knights (admittedly one of the odder pieces in chess) to be on the board?

I note that IBM is asking for injunctive relief. So it is critical for SCOX to defend and manage to wiggle off of the fork-check of the GPL dilemma. Otherwise their business side is in big trouble. If (and admittedly a big IF) IBM did find incorporated GPL'd software inside SCOX's proprietary products, then the whole of The SCO Group could be checkmated.

---
Gawker

[ Reply to This | # ]

If Darel would have only been reading his Bible
Authored by: Desert on Wednesday, March 31 2004 @ 10:17 AM EST
Make friends quickly with your opponent at law while you are with him on the
way, in order that your opponent may not deliver you to the judge, and the judge
to the officer, and you be thrown into prison.
Truly I say to you, you shall not come out of there, until you have paid up the
last cent.

Jesus in Matthew 5:25-26 NASB.

[ Reply to This | # ]

OT: Baldfaced lies in new press release
Authored by: Anonymous on Wednesday, March 31 2004 @ 10:23 AM EST
From SCO's press release of 3/31:

"Worldwide Annual Conference to Highlight SCO's 25th Anniversary While
Focusing on UNIX Product Innovation, Licensing and Protection "

"SCO Forum 2004 will highlight the company's 25th anniversary in bringing
powerful UNIX software solutions to businesses around the world."

Excuse me? They have been providing Unix solutions for 25 years? Don't they mean
that the people that they bought it from bought it from other people who bought
it from other people who wrote Unix 25 years ago?

Tom Z.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: hal9000 on Wednesday, March 31 2004 @ 10:34 AM EST
http://biz.yahoo.com/prnews/040331/law045_1.html

Your not going to believe
this. SCO now claims
to have been around for 25 years.

What's going on ??

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 10:40 AM EST
IBM's document is highly educational and a very
useful summary of the situation from a perspective
congenial to almost all groklaw readers.

But what are the real chances of a declaratory
judgement being granted? I understand that
requests for DJs are extremely common in civil
litigation and are almost never granted.

So the chances are, what, 1 in a 100 perhaps? This
is just another small step in a looooooong process.

[ Reply to This | # ]

History According To SCO
Authored by: dmscvc123 on Wednesday, March 31 2004 @ 10:50 AM EST
Here's SCO profile which gives their history:
"Caldera, Inc. was founded in 1994 by Ransom Love and Bryan Sparks. In
1998, Caldera Systems, Inc. was created to develop Linux-based business
solutions. In 2001, Caldera Systems, Inc. acquired the assets of the Server
Software Division and Professional Services Division of The Santa Cruz
Operation, Inc. (SCO), forming a new company, Caldera International, Inc. In
2002, Caldera changed its name to The SCO Group (Nasdaq: SCOX)."
http://www.sco.com/company/profile.html

But here SCO traces their history back to 1979:
"1979 - SCO founded by Doug and Larry Michels as a UNIX® system porting and
consulting company."
http://www.sco.com/company/history.html

[ Reply to This | # ]

Slander of Title, ironically?
Authored by: jtv on Wednesday, March 31 2004 @ 10:51 AM EST
IANAL, but doesn't paragraph 62 summarize what could have been a "slander
of title" charge similar to the one SCO made against Novell?

[ Reply to This | # ]

And I would have gotten away with it....
Authored by: Anonymous on Wednesday, March 31 2004 @ 10:56 AM EST
if it weren't for you meddling geeks and that pesky Groklaw.

-Darl

[ Reply to This | # ]

This is a strange story
Authored by: FrankH on Wednesday, March 31 2004 @ 11:09 AM EST
Here's a story I found on Linux Today:

Ope n source software plays different rules

It seems that "Today, most companies that [make money using open source] fall under two methods: Those selling freely available source code with their proprietary enhancements and applications companies such as RedHat or Caldera. Or they are offering two kinds of license, like SleepyCat."

Caldera? Who he? Do you think the author is just a touch out of date?

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: sef on Wednesday, March 31 2004 @ 11:16 AM EST

Huh... anyone else thinking IBM's lawyers got tired of playing around?

[ Reply to This | # ]

The GPL will be tried in court...
Authored by: Anonymous on Wednesday, March 31 2004 @ 11:17 AM EST
Hehe, these counterclaims contain all the assorted stuff i've seen circulating
here or anywhere else.
It even contains that SCO broke the GPL :)

[ Reply to This | # ]

Back of the envelope calculation
Authored by: ssavitzky on Wednesday, March 31 2004 @ 11:20 AM EST
If IBM's claim of GPL copyright infringement succeeds, and there's no good
reason to think it wouldn't, that implies that every other kernel contributor
would have a similar claim.

So, if there are maybe 100 kernel contributors willing to file suit, and 1000
copies of the kernel distributed improperly, and $150,000 per infringement, then
by the RIAA's logic this brings the total to $15 Billion. Clearly SCO can't pay
up, but if somebody could prove that Microsoft put them up to it...

---
The SCO method: open mouth, insert foot, pull trigger.

[ Reply to This | # ]

Corrections
Authored by: wvhillbilly on Wednesday, March 31 2004 @ 11:35 AM EST
96 ...waivers ofSCO's purported... of SCO's (need space)

107 line 2 ...seeks to assert s irrevocable... its

---
What goes around comes around, and it grows as it goes.

[ Reply to This | # ]

IBM wins another round
Authored by: codswallop on Wednesday, March 31 2004 @ 11:37 AM EST
Now we see why IBM was happy to let SCO amend it's claims. They got to amend
their counterclaims. They've cleaned up the language, added examples, shored up
any weak points and forced the issue of copyrights to the front. If IBM get's
its way SCO either proves it has the copyrights or they lose counterclaims 2
(Lanham act), 3(unfair competition), 4 (interference) and 5(unfair and deceptive
trade practices).

Also winning the declarative judgements would mean IBM could argue that it has
proven counterclaim since Linux is now not a derivative work. SCO can only argue
that it's a modification (ATT agreement says modification or derivative work). I
wonder why IBM didn't ask for a judgement on the SCO derivative theory
explicitly? They've stated it in filings and in public, it's an issue of Federal
law, and it's certainly an actual controversy, damaging and something for which
relief could be granted. Any theories?

The effect on SCO's claims isn't as clear. They're such a tangled mess, it's
hard to tell. For instance in claim one they have an internal use argument as
well as a derivative works argument. It's not based on copyrights. I suspect
that IBM is going to have to attack the claims a paragraph at a time, until they
look like swiss cheese. Whatever's left would go to a jury, if SCO is still
around then. From a third party point of view this shouldn't matter.

Does anyone know whether IBM can still file, has filed or will file an amended
answer to the SCO amended claims?

Now that IBM has helped Novell out a bit, will Novell help IBM by going for an
injunction against SCO for asserting APA rights it doesn't have? That would end
the IBM case, because Novell's contract term waivers would have been ruled
valid.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: phrostie on Wednesday, March 31 2004 @ 11:46 AM EST
"Is it possible that SCO Group is acting in the best interest of Linux, the
GPL, and Open Source as a whole?"

i'm sure after they lose they will try to spin it this way and ask if they can
come sit by the fire and sing kombiya with all the other linux vendors and thier
paying customers.


---
=====
phrostie
Oh I have slipped the surly bonds of DOS
and danced the skies on Linux silvered wings.
http://www.freelists.org/webpage/snafuu

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 11:47 AM EST
One more boulder on the mountian of paperwork, but it is a rather large rock,
and well made.

IBM has been rather nasty at times in the past, and while I do fully support
them in this instance, I have always had a bit of fear that they would not live
up to the FOSS world in the long run, and yes, I put Novell in the same
category.

In the headline, IBM lists 9 copyrights recently listed, not necessarily recent
work, which caused me to pause. Then reading the text I find that all of them
have been GPLed. While it is in their interests to do so, I am impressed that
they actually did it (among other works they contributed).

I really do not expect IBM (or Novell) to give up the farm to GPL, but I am
seeing them contribute meaningful code and technology to the common good. They
do not have to do this, but they are. In addition, IBM having made as part of
their counterclaim violation of the GPL, it means that they just might be
willing to stand behind it and the community for the long haul.

Maybe they really are more than another greedy corporation...

[ Reply to This | # ]

This is...
Authored by: wvhillbilly on Wednesday, March 31 2004 @ 11:49 AM EST
a most damning indictment of SCO's behavior. And a very thorough one, too. I
don't see any way they're going to escape this one.

---
What goes around comes around, and it grows as it goes.

[ Reply to This | # ]

Who WantsThis Job?
Authored by: dmscvc123 on Wednesday, March 31 2004 @ 12:08 PM EST
It seems funny that SCO lists on their jobs website a job opening for a Linux
software engineer.

Job Title:
Senior Software Engineer
Requisition# 40235
Posted 13 January, 2004
Location:
Delhi, India
Department:
India Engineering
Reports To:
Manager of Engineering
Job Description:
Design and develop systems-level software for Linux and provide systems support
by performing the following duties:
http://www.sco.com/company/jobs/

[ Reply to This | # ]

OT: SCO Forum 2004 -- wheeeere's Darl??
Authored by: belzecue on Wednesday, March 31 2004 @ 12:16 PM EST
You'd think Darl would be involved, right? I dare you to find mention of him in
the SCO Forum 2004 pages. He's in the PDF download, but only so far as his
participation in the 2003 Forum. Interestingly, this years invitation is signed
by Jeff Hunsaker, Senior VP and General Manager. Darl must be having a beer
with Boies in the Twilight Zone.

Interested in contributing to SCO's war chest? Then sponsor the 2004 Forum!
Out with the check book:

http://www.thescogroup.com/2004forum/sponsors/opportunities.html

Premier Sponsorship $85,000.00

Gold Sponsorship $65,000.00

Silver Sponsorship $10,000.00

Bronze Sponsorship $5,000.00

SCO Forum Welcome Reception $15,000.00

SCO Forum Lanyard $3,000.00

SCO Forum Room Drop $4,000.00

Event Registration Bag $20,000.00

SCO Forum Newsletter Article $2,500.00


And here's a blast from the past. Rick Smith was at SCO Forum 2003. Among
other things, he mentions some things that surely make him cringe today,
three-stooges style, when considering later developments (or non developments):

http://www.reviewsonline.com/SCO2003.htm Rick Smith

"It doesn't take a rocket scientist to show that this code was copied,
although SCO has hired NASA pattern recognition analysts to find more examples
of less flagrant copying."

To bring yourself up to speed on Forum 2004, why not stroll down memory lane and
view the PPT files available here:

http://www.sco.com/2003forum/ppt.html powerpoint presentations

[ Reply to This | # ]

Is IBM staking out territory?
Authored by: Anonymous on Wednesday, March 31 2004 @ 12:25 PM EST
Paras 1-102 seem to retell the whole story, more or less.

Naturally, they include reference to SCO attempting to damage IBM's legitimate
business. Perhaps more interestingly, they make similar claims regarding the
Open Source community at large. Which is - on the face of it - fair enough:
they're setting down what we all know.

But, legally speaking, is it any of IBM's business that SCO might be damaging
the community at large? And if not, does this really belong in a document whose
sole purpose is pleadings in a lawsuit?

IBM must know that their document will be disseminated far beyond the courts and
lawyers directly involved. And they've retold the story in good plain english,
pretty free from legalese-gibberish until after para.102.

Methinks this is for our eyes, too!

[ Reply to This | # ]

Possible error in IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: agriffin on Wednesday, March 31 2004 @ 12:34 PM EST
In paragraph 12, the phrase "AT&T Agreements" is established; it
is used in 114, 115, 116, and 117.

In paragraph 14, the phrase "IBM Agreements" is first used, but not
established; it is also used in 85, 87, 89, 90, 91, 93, and 95.

It seems that either "IBM Agreements" needs to be defined if it is
intended to mean something other than "AT&T Agreements" or it
needs to be replaced with "AT&T Agreements".

[ Reply to This | # ]

Why is SCO copyright invalidity not in Prayer for Relief?
Authored by: mitphd on Wednesday, March 31 2004 @ 12:53 PM EST
The one of the biggest bombshells in IBM's revised filing is in the Ninth Counterclaim:
167. IBM is entitled to a declaratory judgment pursuant to 28 U.S.C. 2201 that IBM does not infringe, induce the infringement of, or contribute to the infringement of any SCO copyright through the reproduction, improvement, and distribution of AIX and Dynix, and that some or all of SCO's purported copyrights in UNIX are invalid and unenforceable.
If we look at the revised Prayer for Relief, we see the declaratory judgement of non-infringement by IBM, but nothing about declaring the invalidity of SCO copyrights. Does this mean that, while IBM would be entitled to a declaratory judgement that SCO's copyrights are invalid, IBM is not actually going to ask for one?

[ Reply to This | # ]

I love it...
Authored by: olly on Wednesday, March 31 2004 @ 01:00 PM EST
This is a great document. In particular, I just love this paragraph:
60. SCO further persisted in maintaining for nearly a year the unsound claim that IBM had misappropriated its trade secrets. Yet when pressed to identify a single trade secret that IBM allegedly misappropriated, SCO could not, even after being ordered to do so by the Court. SCO finally (and properly) abandoned this claim, upon which SCO's entire lawsuit was initially premised, in its Second Amended Complaint.

[ Reply to This | # ]

Bifurcate counter punch!
Authored by: lightsail on Wednesday, March 31 2004 @ 01:03 PM EST
SCOG attempt to bifurcate the patent counter-claims is now superseded by the
copyright counter-claims that really need to be kept with the original claim.

Here in the third round Undefeated heavy weight Champ IBM is plummeling the
overmatched SCOG. SCOG is down! ONE TWO .... Ten The WINNAH!! IBMMMM by knockout
in the third!!

[ Reply to This | # ]

FYI, IBM's latest Certificate of service
Authored by: DBLR on Wednesday, March 31 2004 @ 01:38 PM EST
Did not see this posted so thought you all would like to know that IBM just
served SCOG once more for production of documents :)

124-1: Certificate of service by Intl Bus Mach Inc re: fourth set of
interrogatories and fourth request for production of documents (blk) [Entry date
03/30/04]

Charles

---
Some Lawyers are just like bananas, they are all crooked, yellow and slimy.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 01:41 PM EST
"173. IBM is entitled to a declaratory judgment pursuant to 28 U. C. 9 2201 that IBM does not infringe, induce the infringement of, or contribute to the infringement of any SCO copyright through its Linux activities, including its use, reproduction and improvement of Linux, and that some or all of SCO' s purported copyrights in UNIX are invalid and unenforceable."

Is that asking a judge to say there is no infringement, OR to say that SCO hasn't shown any infringement? Because, given the size of code we are talking about, I can't see how I judge could possibly say that there is definitely no infringement. But they could easily say SCO hasn't shown any proof of infringement.

Which statement is IBM asking the judge to make?

[ Reply to This | # ]

Movie scenes
Authored by: overshoot on Wednesday, March 31 2004 @ 01:45 PM EST
I keep mixing up two movies: "Crocodile Dundee" and "The Mask." In the famous scene where the punk pulls a knife on Paul Hogan, I see The Mask instead pulling out a BFG and saying, "THIS is an IP lawsuit!"

[ Reply to This | # ]

What is the story?
Authored by: JustFree on Wednesday, March 31 2004 @ 01:52 PM EST
Was not Xenix orginally developed by Microsoft? Xenix was sold to Santa Cruz Operation is 1983. Santa Cruz Operation was founded in 1979 as a UNIX consluting company. This is the oldSCO now called Tarantella after selling their Unix business to Caldera Systems. This is all confusing. What does The Open Group own? What is the story? Any clarification?


---
as in free speech get it.

[ Reply to This | # ]

Generous SCO
Authored by: Anonymous on Wednesday, March 31 2004 @ 01:53 PM EST
According to their stock listing information at Yahoo Financials, Darl was paid
a smidge over one million dollars at the end of October, 2003. Wow, I wanna be
paid a million plus for running a company into the ground and incurring the ire
of the known computing world!

[ Reply to This | # ]

At SCO's Website....
Authored by: Anonymous on Wednesday, March 31 2004 @ 01:58 PM EST
At the SCO/SCOsource website, if you look at their FAQ page on licensing, FAQ#17 indicates that SCO expects everyone who operates on Linux to pay them for a license regardless of the outcome of a legal battle. The FAQ reads as this:
"How can SCO expect me to purchase a license when its case with IBM hasn’t been resolved yet? What if SCO loses its case against IBM? Will it reimburse Linux customers who purchased a SCO IP License?
"Some Linux users have the misunderstanding that the SCO IP License hinges on the outcome of the SCO vs. IBM case. If that case were completely removed, Linux end users would still need to purchase a license from SCO to use the SCO IP found in Linux. The IBM case surrounds misuse of derivative works of SCO UNIX. It does not change the fact that line-by-line SCO IP code is found in Linux. The copied code includes copyrighted headers and other proprietary UNIX source code."
The link is here: http://www.sco.com/scosource/linuxlicensefaq.html

Furthermore, at SCO's site, SCO claims that UNIX is legally unemcumbered. They clearly state this on the home page under a separate link. Reason number five to buy UNIX from SCO, they claim, is that:
"SCO is the owner of the UNIX® Operating System Intellectual Property that dates all the way back to 1969, when the UNIX® System was created at Bell Laboratories. Through a series of mergers and acquisitions, SCO has acquired ownership of the copyrights and core technology associated with the UNIX® System. The SCO source division will continue to offer traditional UNIX® System licenses to preserve, protect, and enhance shareholder value."

The link is here: http://www.sco.com/5reasons/

I find both of these "facts" as stated on their website to be flagrant disregards for known truths, and am wondering if this is part of SCO's continued "year of living dangerously."

[ Reply to This | # ]

... and here come the spin artists!
Authored by: Anonymous on Wednesday, March 31 2004 @ 02:13 PM EST
First up to the Plate is the Didiot herself with this rather weak effort.

She asserts that "a favorable ruling is not a foregone conclusion", that "The whole case has been blown out of proportion with claims and counterclaims" and that "Linux extremists have been fanning the flames". Take a bow everyone.

She also adds that "The case has ramifications for IBM's reputation, which has suffered along with SCO's, during the length of the dispute". IBM's lawyers could probably use this as evidence in their claim for damages.

She finishes up with "This still has a long way to go", adding that "the discovery process alone is expected to take years". In your dreams Didio.

[ Reply to This | # ]

Buy-back conditions of the Baystar deal
Authored by: Anonymous on Wednesday, March 31 2004 @ 02:28 PM EST
I was just wondering: Should we start looking for action around the Baystar
deal? As far as I can remember (doesn't say much ;-) SCO would have to redeem
Baystar for each stock at a fixed price if the value of SCOG stock fell below
$10.50 and remained there for more than 20 consecutive days. From what I can
tell from the charts provided by FT and Yahoo Finance, SCOG descended below that
level on March 10 and has remained there since. Time's up? Or wasn't that action
quite as compulsory as it sounded in the financing documents? *liquidity
crisis?* ;-)

[ Reply to This | # ]

Oooh.... Did I see this right?
Authored by: David on Wednesday, March 31 2004 @ 02:42 PM EST
In the prayer for relief, section f): (f) granting IBM injunctive relief, enjoining and restraining SCO and its affiliates, subsidiaries, officers, agents, servants, employees, attorneys, successors and assigns and all others persons acting in concert with them, from further violating IBM's rights as described above....

Would that, by any chance, include certain entities involved in arranging funding for the SCOundrels?

Wheee!

[ Reply to This | # ]

OT: Microsoft money trail
Authored by: Thanatopsis on Wednesday, March 31 2004 @ 03:08 PM EST
Found this over on the Yahoo SCOX board:

Insider ID ?
by: stats_for_all 03/31/04 02:41 pm
Msg: 118602 of 118615

I note from Jonathan Cohen (Royce funds) Analyst interview made October 1, 2003 this comment. "I would also like to mention that Dana Serman, our senior research analyst, has done excellent work on our portfolio companies this year. " http://www.roycefunds.com/commentary/manager_commentary_100103.html
Octobe r 1, 2003

Googling Dana Serman demonstrates that he was employed (at least 2000-2001) in the office of Lazard Freres that Rich Emerson (ex MSFT mergers VP) managed until he left for MSFT in November 2001. Rich Emerson was ID'ed as the dealmaker at MSFT in the Halloween memo.

It seems very likely that Emerson tipped Dana Serman to the MS money trail to SCOX. Dana used the info to buy into SCOX for Royce.

===End Quote===

Click y thing for the link above.

---
using namespace ianal;
accept(this->as(sound_advice)) ? abort() : continue();

[ Reply to This | # ]

Topic for discussion
Authored by: TomWiles on Wednesday, March 31 2004 @ 03:11 PM EST
Guys:

I think that there is a very important undercurrent here that many people are
missing.

This ties directly with the request for Declaratory judgement. IBM is taking
the positon that all code in Kernel 2.4 is non-infringing because it was
released by SCO under the GPL. SCO has always maintained that the GPL is
illegal and uninforceable, therefore SCO retains full rights to their code in
Kernel 2.4

Now what IBM has cleverly done is bringing the GPL to the forefront.

The Judge can not make a declaratory ruling without first finding in favor or
against the GPL. From day one, SCO has tried to keep the validity of the GPL
out of this case -- restricting it to a contract dispute. IBM's second
amendment appears to assume that the Judge is going to find in favor of the GPL
in the declaratory judgement which, in my opinion, would weigh against SCO in
the counter suit.

It appears that IBM has just moved the legal status of the GPL to the forefront
from someware in the background, and must be delt with first.

Now that is interesting.

Any other perspectives on this subject.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 03:23 PM EST
Dark Darl and the SCOG talking heads will be star witnesses for IBM. Maybe
some bankers will testify. The rats might be outed. Watch them turn.

I enjoy how IBM's filing brings the public SCOG statements into the crux
of this case. The public SCOG FUD never appeared in their court statements
or filings. Now, IBM has pointed out SCOG's fabric of lies, deceit, and worse
in their filing.

What were they thinking? Why did they change their claims? Do they care
they have contradicted most of their serious claims? How do they carry
on burdened with the knowledge of the future that awaits them?

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 03:32 PM EST
IBM sure seems to be coming out strong. But I wonder if this sort of frivolous
case such as SCO has started won't just happen again from another source. Is
there any chance of jail time for officers of SCO if SCO's claims are found
meritless?

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Superbiskit on Wednesday, March 31 2004 @ 03:39 PM EST
57. On March 7, 2003, without any prior notice or warning that would have allowed IBM to understand SCO's claims and respond to them, SCO sued IBM alleging a host of meritless claims. In its first Complaint, SCO principally alleged that IBM had misappropriated SCO's trade secrets in UNIX System V. SCO also alleged that IBM had breached its contractual obligations to SCO by, among other things, incorporating and inducing others to incorporate SCO's intellectual property into Linux, and that that IBM had competed unfairly and interfered with SCO's contracts with others.
The word "that" is doubled.

[ Reply to This | # ]

Great Forbes article
Authored by: Anonymous on Wednesday, March 31 2004 @ 03:50 PM EST
I don't know if this has been discussed before, but
Forbes has yet another great story about how expensive
and useless Linux is.

One small extract to awake your appetite:

> Carey says one reason he embraced Linux was its lower cost.
> But if Linux becomes almost as expensive as Windows, why not
> go with Windows, and benefit from the work of thousands of Microsoft
> engineers and programmers? Carey talks about "the innovation
> premium"--meaning the price you pay to get the latest and greatest.

This is so ridiculous that now it is just funny.

For a good laugh, just go there:

http://www.forbes.com/businesstech/2004/03/31/cz_dl_0331linux.html?
partner=yahoo&referrer=

[ Reply to This | # ]

OT - Meanwhile in the EU case
Authored by: Anonymous on Wednesday, March 31 2004 @ 04:03 PM EST
Newsforge has some nice quotes from a DOJ official that suggest the EU should
have left poor old Microsoft alone:-

http://www.newsforge.com/trends/04/03/29/1433247.shtml

With this kind of justice department, it's gonna be a tough fight to keep MS
from stomping out FOSS, at least in the U.S. of A.

[ Reply to This | # ]

  • USDOJ - Authored by: RLP on Wednesday, March 31 2004 @ 04:33 PM EST
In the style of Crocodile Dundee:
Authored by: JeR on Wednesday, March 31 2004 @ 04:08 PM EST
"You call that a copyright infringement claim? THIS is a copyright
infringement claim."

[ Reply to This | # ]

What About Contract Infringement?
Authored by: Anonymous on Wednesday, March 31 2004 @ 04:09 PM EST
I was looking to see if there was anything to address IBM's
alledged contract infringement. As I read AT&T contract, IBM's
copyrighted portions of AIX and Dynix are to be considered
derrivative works. And, inspite of the fact that IBM owns the
copyrights to those works, the contract mandates that they be
treated as a part of the original.

Did Novell's waiver release IBM from this particular
responsibility, did anything else, or did I mis-read the AT&T
contract? It seemed rather clear on that point. I think the
newsletter clarification of the contracts to AT&T licensees
appears to release IBM/Sequent from this responsibility but that
does not appear to have been mentioned in this filing.

This seems to me, the weakest link. And that indicates that,
although IBM lawyers are doing a generally superb job, that they
are nonetheless not fully stepping into the shoes of their
opponant to understand how they might make their
counter-claims.

Just thinking... One has to consider everything. I am,
nonetheless, sure SCO will be rightfully squashed into oblivion.
I am wondering what will eventually happen to the UNIX
business rights and other assets SCO currently does possess.

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: ujay on Wednesday, March 31 2004 @ 04:20 PM EST
Wow!! I've been kicking around for a half century, and never, repeat NEVER, has
a legal document held me in such rapt attention. Not even the ones directed at
me!

As I started reading this, I thought it was a street mugging, as I read along,
visions of the SCO Bismark being pummeled by the Nazgul Fleet went through my
head. As I finished, I could only conclude this was the legal equivilant of an
autopsy or vivisection.

Absa-fraggin-lutely magnificent!!

I've noticed that IBM and Novell have been making their documents more palatable
to the legalese challenged. There was a time that docs such as this only
mattered to lawyers, policy makers, judges and other assorted students of law (
sorry PJ, I missed para-legal, you can stomp on me at your pleasure). This case
has brought a multi-disciplinary community together like no other issue probably
ever could. I certainly hope that other 'suits' follow suit.

Where to begin? The overall history is quite condemning. They have succinctly
and definitively described the various tactics of SCO to mislead not only the
public, but the court. Include impressions of possible SEC violations, actual
damage to the complete technical industry, with specifics, and then bring the
GPL to the fore.

It is clear to me that IBM is not satisfied with simply winning this case.
There is enough in this document to indicate their intention of burying SCO once
and for all, with multiple references to actual damages, punitive damages, and
treble damages, as well as recovery of legal and court fees.

And I just love that they want a jury trial, as SCO has already intimated that a
jury would be too dumb to understand the issues (which means they are afraid of
the coverage on-line, allowing people to actually understand the issues from all
sides, not just SCO's). If it goes that far, the jury selection process would
be interesting, that is if such a process is used in civil matters (not being
American, I am unsure of that).

There can be no doubt that the preliminaries are over, and IBM is going for
blood now.


---
Programmer: A biological system designed to convert coffee and cheesies into
code

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 04:21 PM EST
Amazingly, the SCO FUD PR is still working. This article in Forbes confirm it. Here is the article
You can read this "...Carey says. "For us, that makes Linux prohibitively expensive. And it makes a stronger case for us to go Windows."
and this other ""Most open source is imitation," Carey says. "Linux is an imitation of an operating system. If these [Linux] companies are going to create a price point that is significant enough that they are approaching the same pricing model as the innovation premium, why pay a premium for imitation when I can pay a premium and get innovation?" Wow!! This FUD is really amazing!! They are very creative when things are going worst. I never read this before!

[ Reply to This | # ]

eweek story
Authored by: kh on Wednesday, March 31 2004 @ 04:51 PM EST
IBM Goes After SCO's Copyright Claims
But where did they get this?:
But the move does not mean that the SCO-IBM legal saga will be ending shortly. The discovery process first must run its course, and that alone could take years. Only then could the judge grant the motion.

Quandt said she thinks that win, lose or draw, open source has changed forever. "This isn't the end of these kinds of actions. There is a potential that other companies will follow SCO in suing open-source vendors and users.

"Companies will be evaluating risk management for Linux and open source," she said. "In turn, this means that businesses that develop indemnification plans [such as Open Source Risk Management] or mitigate copyright risks in software [such as Black Duck Software Inc.] will do well."

[ Reply to This | # ]

Just compare IBM with Darl
Authored by: Anonymous on Wednesday, March 31 2004 @ 05:10 PM EST
Just compare IBM's statement with the following from Darl McBride:

'Except that if the proprietary touches the other, then it supposedly gets
destroyed. I mean ask CISCO. Anybody heard from CISCO? They're getting attacked
by them at this very point right now on their Linksys acquisition. You have the
drug, the biotech, companies. You go and put together a new drug formula, and
because it's software and touches GPL, if you're not careful, that gets
destroyed. So I think it's a very dangerous setting we're talking about.'

Would you buy shares from this man?

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: RSC on Wednesday, March 31 2004 @ 05:15 PM EST
I see that SCOs' big mouth has come back to bite them in the bum.

They should have gagged Darl right from the start.

You can see why people involved in litigation are always tight lipped. :)

Very impressive PJ, well done.

RSC.


---
----
An Australian who IS interested.

[ Reply to This | # ]

PJ: Ninth and Tenth Counterclaims identical
Authored by: Larry West on Wednesday, March 31 2004 @ 06:26 PM EST
Except for the inclusion of the table of copyrights and the numbering of the
points, the Ninth and Tenth Counterclaims are identical (i.e., the tenth is
superfluous).

Is it so in the original? If so, what's the point?

Thanks again for the great work!

[ Reply to This | # ]

Corrections
Authored by: Azureflare on Wednesday, March 31 2004 @ 06:36 PM EST
SCO: Go to Jail.

Do not pass Go. Do not collect $200.

This statement by IBM is great. They make a lot of points in one document. I just hope they aren't trying to do too much all at once.

Also I've got a possible correction here, this statement looks like it really needs to be revised:

56. SCO undertook to carry out its scheme by, among other things, (a) bringing baseless legal claims against IBM and threatening to sue other companies and individuals, (b) conducting a far-reaching publicity campaign to create the false and/or unsubstantiated impression that SCO has rights to Unix and Linux that it does not have and that IBM and others have violated SCO's rights and (c) otherwise seeking to condition the market to believe that SCO has rights to Unix and Linux that it does not have and cannot properly enforce.

If you read that segment in bold, they already say the campaign was to "create the false and/or unsubstantiated impression that SCO has rights to Unix and Linux..." If you add in " that it does not have" then it sounds like it's false that SCO doesn't have the rights to Unix and Linux (i.e. a double negative). It's bad grammar and is quite confusing.

BTW Great work PJ!

[ Reply to This | # ]

  • No. - Authored by: Anonymous on Wednesday, March 31 2004 @ 08:20 PM EST
  • Corrections - Authored by: TimMann on Wednesday, March 31 2004 @ 09:39 PM EST
OT: PJ Neglects Groklaw! [Leave it up, PJ]
Authored by: webster on Wednesday, March 31 2004 @ 07:06 PM EST

We still do not have PJ full time! Note this from the article above:

...I have marked all the significantly new material in red text. I'm working mighty fast, and I have to stop now to get some paid work done by noon, but then I'll come back and finish...

The only paid work she should have time for is Groklaw. My last appeal was disappointing. If she could generate a surplus, she has great plans to improve the site. She desperately needs a secretary. Everyone should give at least $ .15 an hour for the time you spend on Groklaw. If you spend an hour and a half a day, that amounts to about $55 a year. Lawyers should send your hourly fee for two hours. You can deduct it since you can do legal research here and steal the Motions for yourself. There is a lot of research yet to do. Microsoft is lurking behind all this and IBM is on to them. This battle has just begun.

Support Groklaw. Click on Pay Pal or Click to Give in the left frame. Carry your weight.

---
webster

[ Reply to This | # ]

SCO's 25th Aniversary - Get your souveniers now!
Authored by: Anonymous on Wednesday, March 31 2004 @ 07:12 PM EST
I REALLY want to get a hold of a tee-shirt or something about this whole 25th
Aniversarry - or I will have them made myself. If anyone knows where we might
get them, I am willing to pay - if not, I will get started on the design
tonight!

SCO
1994-2004
Celebrating 25 Years!

Mike A.

[ Reply to This | # ]

Brian Skiba's Fabulous Life
Authored by: RedBarchetta on Wednesday, March 31 2004 @ 07:54 PM EST
My goodness, how the cockroaches scatter when the light goes on. Our friend Brian Skiba has left Deutsche Bank and joined this investment firm.

Now quoting IBM's Second Amended Counterclaims:
"66. SCO's campaign has not been limited to press releases and public interviews. SCO has also propagated falsehoods about its and IBM's rights in non-public meetings with analysts. [..] In a luncheon hosted by Deutsche Bank analyst Brian Skiba, on or about July 22, 2003, for example, SCO falsely stated that IBM transferred the NUMA code from Sequent to Linux without any legal basis to do so and that IBM's actions were giving rise to about $1 billion in damages per week. In an interview in June 2003 with Client Server News, SCO misrepresented to analysts that IBM has improperly released "truckloads" of code into the open-source community."

Can you say scam artist? IBM has spelled out in clear and unambiguous terms the role Skiba played in this fiasco. He was SCO's puppet to the investment industry, banging his SCO drum and singing his SCO song. If this goes to trial, he will be on the witness stand answering for his fraudulent-type practices. Profit was a definite motive - rat's only hang around if there is cheese to be had.

Before the link goes down, check out the fancy French Mansion Skiba owns (this was found on the Skiba Family web site).

[ Reply to This | # ]

IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: Anonymous on Wednesday, March 31 2004 @ 09:27 PM EST
The Amended Counterclaims are just amazing. Check out paragraph 83+ IBM is
bringing up how Novell sent SCO a notice forbidding it from suspending IBM's AIX
license. Ditto para 87 for the Sequent license.

Well, that pretty well blows away SCO's claims against IBM on that issue. I
guess Kimball is going to be reading the APA.

It gets better. In 88+ IBM deals with the derivative code issue. It quotes
Novell to the effect that SCO's derivative code arguments are wrong.

Boy, this just destroys the rest of SCO's case. Game over.

Oh, and in 9, they bring up how Novell disputes that SCO owns the Unix
copyrights.

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GPL What If . .. ... ..... .......
Authored by: Anonymous on Wednesday, March 31 2004 @ 10:27 PM EST
What if IBM during the discovery process finds our that someones GPL code other
than IBM's has been incorperated into SCOG's proprietary software. Since the
code is to be kept confidential and IBM can not defent the infringment. How can
it legally be reported to the copyright holder or does it have to remain
confidential.

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IBM's Second Amended Counterclaims Lists 9 Newly Registered Copyrights
Authored by: chaz_paw on Wednesday, March 31 2004 @ 11:17 PM EST
I have read this document with utter amazement and respect. The comments have
been very interesting and helpful in understanding what all IBM has said.

To me, the most fascinating part was the following except from the Prayer of
Relief:
"(f) granting IBM injunctive relief, enjoining and restraining SCO and
its affiliates, subsidiaries, officers, agents, servants, employees, attorneys,
successors and assigns and all others persons acting in concert with them, from
further violating IBM's rights as described above"

Is this the rosewood stake in Dracula's heart?

Charles

---
United we stand.

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How can IBM use the patent stick?
Authored by: Anonymous on Thursday, April 01 2004 @ 01:40 AM EST
By doing so against SCO for distributing Linux code, don't they void their own
GPL license?

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Between the lines...
Authored by: Anonymous on Thursday, April 01 2004 @ 04:01 AM EST
Just thinking on the new stuff in paragraphs 46-48, the Tenth Counterclaim and
the discovery request for all code in Linux that SCO believes it has rights
to..

Isn't IBM saying yes, we do DISTRIBUTE linux, SCO hasn't shown ANY infringing
cope in discovery and the Tenth Counterclaim says please rule that SCOSource is
based on fiction, because if IBM isn't infringing under these conditions then
no-one is.

Or am I reading too much between the lines?

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What about IBM vs. Microsoft?
Authored by: swengr on Thursday, April 01 2004 @ 08:14 PM EST

Wow!

What HE said! (The awesome words of the IBM lawyers!)

Question: After reading the excellent work by IBM's lawyers, and given:

  • That there is indication that Microsoft, its officers, and its directors, are behind or supporting SCO's barratry, and
  • IBM corporately may have lingering resentment of Microsoft's actions to destroy OS/2 and deny IBM it's rightful place in the PC market (remember that it was IBM that trademarked the term "PC"),

What does the Groklaw community think of the prospects of a later suit by IBM against Microsoft, alleging many of the same wrongs? I'll attempt to lay out some of the claims I would expect:

  1. Microsoft has by direct and indirect financial incentive, and by use of its influence as holder of a monopoly position, illegally undercut and interfered with IBMs customer relations, and with its marketplace.
  2. Microsoft has by direct and indirect financial incentive, promoted and funded SCO's several anti-Linux litigation efforts.
  3. Microsoft has by direct and indirect means, illegally used its influence as a holder of a monopoly position to promote, and possibly to direct, SCO's several anti-Linux litigation efforts.
  4. Microsoft has made public announcements in support of SCOs effort, notwithstanding that they have personal evidence of its meritless nature.
  5. In numerous instances, Microsoft has made public pronouncements, knowing that they were misleading or incorrect, with intention to damage IBM and Microsofts other competitors, and in promotion of Microsofts own products.
  6. Microsoft used its position and control of development of OS/2 to slow and hamper its development.
  7. While under contract with IBM to develop and promote OS/2, and while publically feigning good intentions, William H. Gates III and Microsoft were working purposefully and clandestinely to create a product which would be in direct competition with it.
  8. Microsoft is in breach of contract by its actions to handicap, supplant, and destroy OS/2 and thereby deny IBM it's rightful place in the PC market. (Remember that it was IBM that trademarked "PC"!)
  9. Microsoft has worked both overtly and clandestinely to subvert the market for IBM products, including but not limited to OS/2, DB/2, customer services, mainframe hardware, ...

Certainly, these seem to cover a lot of the same ground: False advertising, breach of contract, Lanham act violations, Intentional Interference with Prospective Economic Relations, Unfair and Deceptive Trade Practices, ...

---
Gratis is nice, Libre is an inalienable right.

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IBM calls for complete dismissal of SCO case
Authored by: kh on Thursday, April 01 2004 @ 11:26 PM EST
Techworld: IBM calls for complete dismissal of SCO case
Robert McMillan, IDG News Service
Jeffrey Neuberger, a partner with Brown Raysman Millstein Felder & Steiner, agreed that the filing appears to show growing confidence on the part of IBM. "They're saying to the judge: 'We don't know what SCO is talking about; there is no infringement'," he said. "They must feel very comfortable that there's no infringement."

Because IBM's filing seeks the broad judgement that IBM has not infringed on "any valid or enforceable copyright owned by SCO", a declaratory judgement in its favor would prevent SCO from bringing up new copyright claims later in the trial, and would have a devastating impact on SCO's case, Neuberger said.

"If the judge comes out and says there is no copyright infringement, then essentially there is nothing else to fight over. It would be the knockout blow to SCO's case," he said.
Seemed to me in the article generally they were confusing a "declaratory judgement" with a "summary judgement", but on the other hand stating that a declaration that there is no SCO copyright in Linux is serious for SCO FUD.

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