SCO sues IBM for $1bn

SCO Group, inheritor of the intellectual property for the Unix operating system, has sued IBM for more than $1bn, alleging Big Blue misappropriated SCO's Unix technology and built it into Linux.

The suit, filed on Thursday afternoon in the 3rd District Court of Salt Lake County in Utah, alleges misappropriation of trade secrets, unfair competition, breach of contract and tortious interference with SCO's business, the Lindon, Utah-based company said. SCO also sent a letter on Thursday demanding that if IBM doesn't meet various demands, SCO will revoke IBM's licence to ship its version of Unix, called AIX, in 100 days.

"We are alleging they have contaminated their Linux work with inappropriate knowledge from Unix," said Chris Sontag, senior vice president of operating systems at SCO and head of the company's SCO source effort to make more money from its intellectual property.

Analysts saw the move as a desperate one for SCO, a company that hasn't been profitable in its current incarnation.

"It's a fairly end-of-life move for the stockholders and managers of that company," said Jonathan Eunice, an Illuminata analyst. "Really what beat SCO is not any problem with what IBM did - it's what the market decided. This is a way of salvaging value out of the SCO franchise they can't get by winning in the marketplace."

SCO hasn't sued other companies that have Linux products, for example Red Hat or SuSE, but Sontag didn't rule out such actions.

Laura Keeton, a spokeswoman for IBM, declined to comment on the matter.

However, Steve Mills, senior vice president of IBM's software group, said in an earlier interview that he didn't see any intellectual property concerns between Unix and Linux. He also was critical of SCO's efforts.

"What SCO is doing raises a bunch of questions," Mills said. "Instead of building customer value, they're chasing people saying, 'License technology from us.' To me it's an odd strategy."

IBM has a large arsenal of its own intellectual property, he said. Big Blue has been developing operating systems since the 1950s and "sits on a large collection of intellectual property" of its own.

Big Blue doesn't see any intellectual property concerns between Unix and Linux, Mills added.

Linux itself likely won't be directly affected, Illuminata's Eunice predicted. "If there's any impact on Linux, it'll be principally through fear, uncertainty and doubt," he said. "The principal winners in that would not be SCO but Microsoft and potentially Sun."

Representing SCO is David Boeis of Boeis, Schiller and Flexner, the attorney who prosecuted the US Justice Department's antitrust case against Microsoft and represented Al Gore in the vote-counting controversy in the presidential election.

SCO in January announced SCOsource, its strategy to seek licensing revenue more aggressively from Unix intellectual property the company owns. And the plan is moving quickly, beginning with a mechanism by which companies may license supporting Unix software "libraries" that let programs written for SCO Unix run on computers that actually use the Linux operating system.

Stephen Shankland writes for CNET News.com. Michael Kanellos contributed to this report.