Dispute between SCO and IBM for infringement of rights is partially resolved


During the last few months we have shared here on the blog the follow-up on the case of the dispute between SCO and IBM which has lasted about 20 years due to a series of lawsuits that have been made on the issue of copyright of Unix.

It all started in 1995 with the sale by Novell of the Unix code to the company SCO (a UNIX vendor for x86 processors). The amount of the transaction was around $ 150 million. This sale generated two interpretations among the participants. Novell believes that it has only transferred the code, not the intellectual property rights, while SCO claims to have purchased both.

In 1998, IBM, Santa Cruz Operation, and others came together to create Project Monterey, with the goal of developing a version of UNIX that runs on multiple hardware platforms. What the Linux community had started to do as well.

In 2001, IBM decided that Linux was the future and abandoned the Project Monterey, even dragging some of the Project Monterey participants in its wake. By then, Big Blue had created an experimental version of its own system. AIX operating similar to UNIX that used SCO code. AIX is the Unix-like operating system released by IBM since 1986. AIX stands for Advanced Interactive eXecutive, however only the acronym is used.

But once he left the Monterey project, IBM transferred some of its intellectual property to Linux. SCO objected to these contributions because it believed that IBM had ceded its assets to the Linux open source codebase.

Furthermore, on March 6, 2003, Caldera Systems, renamed as SCO, brought an action against IBM for breaking the contract for their Monterey joint project which referred to the joint development of a Unix operating system. The plaintiff accused Big Blue in particular of having disclosed part of the Unix source code and methods for contributing to Linux and for developing AIX.

Initially claiming $ 1 billion in damages, his claim increased rapidly in three months to reach $ 3 billion. Note that the same year SCO also attacked Novell by seeing an illegal derivative of Unix source code in Linux, claiming $ XNUMX billion for patent infringement.

Fought back by IBM in August 2003 in Utah federal court and sparking unprecedented outcry in the IT world (from the Free Software Foundation to Novell, including its own employees), SCO quickly found itself in very poor condition.

Now claiming $ 5 billion from IBM, the company went to great lengths in July 2004 by detailing its complaints that some of its code was included in the UNIX executable and the JFS file system binding format. Or init, it is illegally contained in the Linux kernel.

In fact, even though SCO went bankrupt, its intellectual property continued to live on under the new owners. IBM kept fighting and organizations that inherited SCO's intellectual property kept trying new corners, finding new sources of funding, or both. Xinuos, which took over SCO's assets 10 years ago, has turned against IBM. Big Blue is again accused, this time by Xinuos, of having illegally copied the code of the software that the latter bought from SCO to use it in its operating system.

Xinuos, which sells UnixWare and OpenServer, filed a lawsuit earlier this year alleging theft of intellectual property and monopoly market collusion against joint defendants IBM and Red Hat. Xinuos was formed around SCO Group assets about ten years ago under the name UnXis, and at the time, SCO's successor had no interest in continuing the latter's long-running dispute over Linux.

The lawsuit alleges that IBM incorporated unspecified code from the company's UnixWare and OpenServer code into IBM's own AIX operating system. It also alleges that IBM and Red Hat directly conspired to split the entire Unix-like operating system market into significant business opportunities for IBM, leaving Xinuos in the dark.

Even more surprising, the company claims that IBM expressly seeks to destroy FreeBSD in its entirety: "IBM's strategy with Red Hat has been expressly to destroy FreeBSD, on which the most recent innovations from Xinuos were based."

And he continues to seek not only damages, but the complete nullification of IBM's acquisition of Red Hat: “The merger must be declared illegal in violation of at least Section 7 of the Clayton Act, and IBM and Red Hat must be ordered to separate and cancel all associated agreements between them ”.

Utah District Court finally ended the lawsuit of the SCO against IBM.

According to the Court, since:

"All claims and counterclaims in this case, alleged or not, alleged or not, have been resolved, are compromised and are resolved in their entirety, and concurring with just cause. IT IS HEREBY ORDERED that the parties' request be GRANTED ... The parties will bear their own respective costs and expenses, including legal fees. The secretary is in charge of closing the action ”.

On August 26, 2021, a settlement petition from the United States Bankruptcy Court for the District of Delaware indicates that the parties "have agreed to resolve all disputes between them through a payment to the administrator (...) of $ 14,250,000" within five business days from the effective date of the settlement agreement. Clearly, if the proposal were accepted by both parties, this agreement would end the former SCO's lawsuit with IBM. In 5 days, IBM will have to pay the $ 14,25 million by transfer to the administrator that manages the bankruptcy of SCO, which was renamed the TSG Group. For the latter, this proposal is made in a reasonable manner, taking into account the best interest of creditors and must be approved.

In return, TLD waives all rights and interests in all ongoing or future litigation against IBM and Red Hat, and any allegation that Linux infringes SCO's Unix intellectual property.

Source: Court order

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