7 March 2003 SCO Group, owner of the intellectual property of the Unix operating system, is suing IBM for more than $1 billion, alleging that IBM misappropriated its technology and used it enhance the open source operating system Linux.

The suit, filed in Salt Lake City, Utah, alleges misappropriation of trade secrets, unfair competition, breach of contract and interference with SCO’s business. SCO has also sent a letter to IBM stating that if IBM doesn’t meet various demands, SCO will revoke IBM’s license to ship AIX, the company’s version of Unix, in 100 days.

Analysts have described the move as a desperate measure by a desperate company. SCO Group, which specialises in Unix for Intel-based computers, has been making heavy losses in recent quarters and is aggressively policing its intellectual property portfolio in a bid to generate additional revenues.

However, part of the reason that SCO has been doing badly is that it has been losing out to the Linux operating system, which also runs on Intel machines.

SCO chief executive Darl McBride claims that Linux only became a viable alternative to SCO after IBM dedicated a huge army of its programmers to improving and developing the system. Moreover, McBride believes that IBM used SCO intellectual property to make those improvements and that, by sharing its source code with the open source community, it is also in breach of its Unix licence.

The relationship between IBM and SCO is all the more bitter because the two were formerly partners, working together on a project designed to develop a Unix operating system for high-end 64-bit Intel systems, called Monterey. IBM canned that development in 2001 and began working in earnest on Linux.

In its complaint, SCO alleges: “IBM made concentrated efforts to improperly destroy the economic value of Unix, particularly Unix on Intel, to benefit IBM’s new Linux services business.”

Although the suit is being regarded as a vengeful move, it is not without some merit. “Creating Unix on Intel processors needed expertise that SCO developed but IBM lacked,” commented Jonathon Eunice, an analyst with Illuminata.

SCO has also splashed out on a top-drawer lawyer to prosecute the case — David Boies, the attorney who prosecuted the US Justice Department’s antitrust case against Microsoft.

Although IBM is the only company mentioned in the lawsuit, SCO has not ruled out taking action against other companies that have Linux products, such as Red Hat and SuSE.