IBM retaliates against SCO

NEW YORK:IBM fired the latest volley in a war over the freely distributed Linux operating system and the code it's based on, charging in a countersuit that SCO Group Inc. violated license agreements.

The move by International Business Machines Corp. of Armonk, New York follows a $1 billion lawsuit filed in March by SCO accusing it of taking parts of the Unix operating system code, for which SCO has intellectual property rights, and introducing them into Linux.

Linux is an operating system supported by a network of programmers who share software codes and can be obtained for free, making it popular with companies looking to cut costs. It competes with Microsoft Corp. in the market for server software for managing computer networks.

IBM, in its counter-suit filed in federal court in Utah, said SCO had infringed on four IBM patents and breached the general public license for Linux, according to the court documents. IBM also said that SCO had damaged its business by disparaging IBM's AIX operating system, or IBM's version of the Unix operating system, by saying it would revoke IBM's Unix licensing rights.

SCO said in a statement that it still intends to require customers to license the versions of Linux it says infringes on its intellectual property.

"We view IBM's counterclaim filing today as a weak effort to distract attention from its flawed Linux business model. It repeats the same unsubstantiated allegations made in Red Hat's filing earlier this week," SCO said.

Regarding the patent infringement claims, SCO said that it has shipped the products for nearly two decades and that this is the first time IBM has raised the patent infringement issue about them.

IBM filed the counterclaim on Wednesday, one day after SCO unveiled terms of its controversial plan to seek licensing fees from companies using Linux. SCO has sent letters to 1,500 companies regarding their use of Linux, according to the suit.

Bob Samson, IBM vice president of systems sales, said in a memo to customers that "SCO's scheme is an attempt to profit from its limited rights to a very old UNIX operating system by introducing fear, uncertainty and doubt into the marketplace."

IBM's countersuit is more likely to push the two companies toward a settlement because IBM included the four patent infringement claims, which carry hefty legal fees, said Brian Ferguson, an intellectual property lawyer with McDermott, Will & Emery in Washington D.C.

"IBM now has offense and claims that they can assert against SCO that are really going to force SCO to consider lowering its asking price in any settlement," Ferguson said.

In addition, SCO is facing a lawsuit from Raleigh, North Carolina, Linux distributor Red Hat Inc. It filed a formal complaint in Delaware on Monday seeking to stop SCO from making claims that would harm its Linux business.

"I think this was a real bad week for SCO," Ferguson said.

SCO shares, which have gained sharply from about $3 since it announced its suit, fell 97 cents, or 8 percent, to close at $11.03 on the Nasdaq after falling as low as $10.50 in intraday trading. IBM gained 94 cents, or 1 percent, to $80.69 on the New York Stock Exchange.

© Reuters