I've been struggling for days trying to do such a chart by hand, and the struggle was because the paragraph numbers were not consistent in the versions, so there was a lot of up and down and back and forth, and anxiety about whether I was getting it right or was missing something. And suddenly, up pops Stephan with a computer solution. So here is the result. This is what computers were born for, so to speak, and I am very grateful to Stephan for taking the time to do this for Groklaw.

I find charts like this very, very helpful in figuring out what is going on. For example, it wasn't until I started working on this chart that I noticed that SCO's claim about the OpenServer shared libraries, numbers 44-47 of their Amended Complaint, has completely disappeared from their 2nd Amended Complaint.

Check the originals for anything that matters, as always, and if you see any errors, do tell, so we can perfect this process. We will, obviously, do this regularly from now on, now that Stephan has written this program for us.

Note that all changes are in red, whether text that was dropped or new material, so you can quickly see all the changes just by looking for the red text. You can find SCO's Amended Complaint [as PDF, its 2nd Amended Complaint [as PDF], and IBM's 2nd Amended Answer [as PDF] on the Legal Docs page, where we keep all the legal documents in the case, and a thank you to grouch for keeping that page up to date. We will be reorganizing it, now that it's getting so complex, to try to make it easier to find what you need. Stephan has designed a graphic that will be ready soon that I think will also help, when it's done.

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