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August 14, 2003

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IBM Ups SCO Lawsuit Ante to Include Copyright and Patent Infringement

Counterclaim Adds Linux Copyright Issues to the Fray

U.S. GNU/Linux Community Fights Back

MozillaQuest Op-Ed

By Mike Angelo -- 14 August 2003 (C) Page1

Editor's Note: This article discusses some very serious and complex issues. We hope that you will take the time to read this story in its entirety -- particularly if you might post opinions about the SCO IP issues to forums, newsgroups, or mailing lists. If you do not read the entire story, you should in the very least read page 1 and the Conclusions on page 4.

The full 45-page IBM Answer and Counterclaim text, a 22-KB download, is available. See the Resources Section on Page 4 of this article.

Article Index

Overview

Tom Carey and MozillaQuest Magazine Discuss IBM's Counterclaims

The Ten IBM Counterclaims

IBM's Background Allegations of Facts

IBM's Facts Are Correct

IBM's Sixth Counterclaim, Breach of the GNU General Public License

Discussion

Conclusions

Resources

SCO-Caldera v. IBM:

SCO Clears Linux Kernel but Implicates Red Hat and SuSE

IBM Files Answer to SCO's Caldera v IBM Complaint

IBM Response to SCO-Caldera Complaint Is Outrageous!

SCO Has Not Found Its Code in Kernell.Org Linux Kernel or in GNU/Linux OS -- Conectiva, Mandrake, and SuSE Say No SCO in Their Code

Kernel.Org and GNU/Linux Developers Have Clean Code Safeguards -- Is SCO Trying to Dictate Linux Kernel and GNU/Linux Development Procedures?

Novell Says SCO Does Not Own Unix IP -- SCO Says it Does -- Novel Enters the SCO IP Fray with No Proof and More FUD

IS SCO NDA Sideshow Setting a Trap for Analysts and Linux Developers?

SCO +1, Novell -1 in SCO v Novell Unix-IP Feud -- Novell loses big round in Unix IP fray with SCO-Caldera

Is IBM's Irrevocable Unix License Revocable?


SCO-Caldera & the GNU/Linux Community:

Clarification Note:

While this story was being written and then later while it was being laid out, Tom Carey and I engaged in substantial e-mail discussion about the GPL breach and copyright issue elements of IBM's Sixth Counterclaim, Breach of the GNU General Public License. We both agree that as set forth, IBM's Sixth Counterclaim is a breach of contract claim and not a claim for copyright infringement. We also both agree that it does, however, address copyright issues and violations. Here is something from Tom about that. (M.A.)

Looking at the legal theory here, we are talking about actions that may violate both the GPL and the copyright law.The GPL says: "You may not copy, modify, sublicense, or distribute the Program except as expressly provided under this License. Any attempt otherwise to copy, modify, sublicense or distribute the Program is void, and will automatically terminate your rights under this License. "SCO has arguably violated the GPL by charging a licensing fee. Therefore its license rights to Linux have automatically terminated. Therefore its distribution of the code is a violation of the copyright act. (T.C.)

The argument is that SCO is charging a license fee for Linux, which the GPL forbids. SCO's reply will be that it is not charging a fee for Linux, it is charging a fee for UNIX. Technically, that is correct. And if I had to bet, I would bet that a court will accept that reasoning. Nonetheless, there is some appeal to the argument that the underlying reality is that SCO is charging a licensing fee for Linux, which the GPL forbids. (T.C.)

SCO and Darl McBride might be learning what the expression be careful what you ask for means the hard way. When they filed their breach of contract and other torts lawsuit against IBM in March, SCO and McBride were very careful to exclude Causes of Action (Counts) involving copyright or patent infringement. Moreover, the SCO people have repeatedly emphasized that the SCO v IBM lawsuit is about contracts, not about copyrights or patents.

On Wednesday 6 August 2003, IBM called SCO's bluff, raised the stakes, upped the ante, and introduced counterclaims and affirmative defenses against SCO that involve patent infringement and copyright issues.

Altogether there are ten counterclaims. They all raise the stakes in the SCO-McBride game of FUD (fear, uncertainty, doubt).

The first five IBM Counterclaims deal with breach of contract and tort claims much as do SCO's claims against IBM. However, Counterclaims six through ten go to intellectual property (IP) issues including breach of the GNU GPL (General Public License) and patent infringement by SCO.

That makes the IBM v SCO dispute now not only a lawsuit about contracts and torts, but copyright issues and patent infringement too. Today, let's focus on IBM's copyright issues and patent infringement claims.

However, IP and business practices attorney Tom Carey sees IBM's Sixth Counterclaim as a contract issue rather than a copyright issue. Please see the Clarification Note in the sidebar.

We discussed the copyright issues and patent infringement claims with Tom Carey via e-mail.

Tom Carey and MozillaQuest Magazine Discuss IBM's Counterclaims

MozillaQuest Magazine: Up until IBM filed its answer and counterclaim, the SCO-Caldera v IBM lawsuit was a dispute over contracts breaches and trade secret torts. IBM has raised patent and copyright issues in Counterclaims six through ten. Would it be fair now to characterize SCO-Caldera v IBM as a lawsuit about contract breaches and trade secret torts plus patent and copyright infringement issues?

Tom Carey: The counterclaims do not include a copyright claim, and neither does SCO's complaint (yet). So it is fair to say that the lawsuit is about breach of contract (which both parties now allege against the other), theft of trade secrets and patent infringement.

- MozillaQuest Magazine: Counterclaim six involves the GPL and SCO's alleged failure to comply with the GPL. If that is not a copyright claim, how would you characterize that claim?

- Tom Carey: I would say it is a breach of contract claim. No violation of the copyright act is alleged.

MozillaQuest Magazine: How does the introduction of patent issues change the lawsuit in general?

Tom Carey: The introduction of patent claims requires SCO to play defense as well as offense.

MozillaQuest Magazine: How does it change the proof and evidence needed and the burdens of proof?

Tom Carey: The patent claims are completely different in nature. SCO's complaint requires SCO to show that Linux contains code developed by SCO, disclosed to IBM, and wrongfully contributed to Linux.

Tom Carey: The IBM counterclaim requires IBM to show that SCO's software products, including UnixWare and Open Server, infringe some of IBM's patents relating to data compression, graphical tree menus, and a system for receiving and accepting data objects. SCO will certainly challenge the validity of those patents, claiming that some prior art makes them unenforceable. SCO will likely further claim that even if the patents are valid, SCO's software does not infringe upon them. Finally, SCO may say it has a license (express or implied) to those patents. The trial requires interpretation of the language of the patent claims, and the attempt to explain very complex technology to a jury. It is not a matter of saying, "see here, this code is identical to that code". It is a matter of proving that SCO’s software does or does not include every element of IBM’s patent claims. Then there is the matter of figuring out what the damages are, which involves a lot of analysis, speculation and argument about both the facts and the applicable law.

Tom Carey: As you can see, the issues are completely different. They are also technical and complex.

MozillaQuest Magazine: These additions of patent and copyright infringement issues seem to greatly raise the stakes in this fracas. Do you have any thoughts about that?

Tom Carey: A typical patent lawsuit costs more than $1 million to litigate. The counterclaims can be considered three separate patent lawsuits. So figure $3 million in attorneys' fees for starters. Then there are the costs of expert witnesses, etc.

- MozillaQuest Magazine: When you say three separate lawsuits, do you mean to do that in terms of actual lawsuits in the legal sense of that term or are you doing that in terms of the legal costs and work involved in litigating each patent claim?

- Tom Carey: The legal costs and work involved.

MozillaQuest Magazine: What sorts of money judgments might IBM expect if it wins its IP infringement counterclaims?

Tom Carey: A "reasonable royalty" on infringing software sold by SCO, plus attorneys fees and costs.

MozillaQuest Magazine: Could IBM's IP infringement claims money-wise outweigh all of SCO's breach of contract and tort claims?

Tom Carey: It's too early to tell. It is conceivable that SCO's claims are quite valuable. IBM's claims might only have nuisance value.

MozillaQuest Magazine: How about in terms of IBM's ability to shut SCO down via injunctive relief?

Tom Carey: I assume that you mean interim relief, not an injunction issued after three or four years of litigation. I haven't studied the patents, but that result, on the basis of the patent counterclaims, seems unlikely. A court will want to see all the evidence before deciding the patent claims, and is not likely to put anyone out of business without a full opportunity to defend himself.

- MozillaQuest Magazine: Actually I meant on final hearing. So then, could the court, on IBM's request, shut SCO down in respect to those patents upon final hearing on the merits? Would it be likely to do that or more likely to require SCO to pay reasonable royalties and allow SCO to continue using those patented modules?

- Tom Carey: As a matter of final relief, IBM might get an injunction prohibiting further infringement. But during the course of the lawsuit, SCO will have time to develop work-arounds. That is often possible, preventing a shutdown of the company (or the product). So, assuming infringement, SCO would pay a reasonable royalty for past infringement and deploy its non-infringing solutions.

MozillaQuest Magazine: In some of our discussions prior to IBM filing its answer and counterclaim, you mentioned that if IBM had patent rights over SCO, it could cause some big problems for SCO. It seems to me that IBM's patent infringement claims trump SCO's copyright claims. What are your thoughts about that?

Tom Carey: It's way too early to tell. It has the potential to do so, but it will all depend upon how strong SCO's claims are and how strong IBM's claims are. It is possible, for example, that both companies will find themselves looking at horrendous liability, resulting in great pressure to settle the case. Or the matter could be lop-sided, but I don't know who will have the edge.

  • See Ten IBM Counterclaims on Page 2 ----->

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