IBM in $1 billion lawsuit over trade secrets

IBM's involvement in the Linux software may prove to be a costly investment, as it's accused of stealing source code.

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By  Paul Barthram Published  March 12, 2003

In a strange turn of events the SCO Group has filed a lawsuit against IBM to the tune of $1 billion for allegedly misappropriating its use of the Unix software code license and therefore devaluing the product.

SCO (formerly Caldera Systems) are in uproar with IBM’s development of the Linux software. Accusing IBM of being engaged in ‘tortuous interference, unfair competition and breach of contract’. A rather strange position to take as SCO are a licensee of Linux.

The dispute goes back to when SCO purchased the software development contracts, along with other intellectual property relating to the Unix business from its creators AT&T Bell Laboratories in 1995.

“SCO has more than 30,000 contracts with Unix licensees, and upholding these contracts is as important today as the day they were signed,” commented Darl McBride, president and CEO of SCO. “IBM has taken our valuable trade secrets and given them away to Linux.”

Some commentators might believe that suing a company who has gone on to develop and improve upon a product which you now use is rather haphazard, but McBride disagrees.

“This case is about IBM and they’re not stepping up to their contracts violations. When they take our source code and donate it to the open-source community, that’s when we have the problem,” McBride clarifies.

Despite being a relatively small company, SCO have the right should they so wish, to revoke IBM’s license, and they might not be afraid to use it. Having already flexed their legal muscles three years ago, when they put a persuasive argument to Microsoft over the use of Caldera’s DR-DOS system. The software grandmaster decided to settle out of court to the tune of $250 million, rather than face legal action.

Can an amicable solution can be reached with IBM? Not without a fight.

"We got a copy of the complaint this morning. Based on what we've seen of it, it's full of allegations with no supporting facts," was the opinion of Mike Fay, vice president of communications for IBM.

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